Annual Report and
Financial Statements
31 January 2026
Baillie Gifford
Shin Nippon PLC
Notes
None of the views expressed in this document
should be construed as advice to buy or sell a
particular investment.
Investment trusts are UK public listed companies
and as such comply with the requirements of the
Financial Conduct Authority (‘FCA’). They are not
authorised or regulated by the FCA.
Baillie Gifford Shin Nippon PLC currently conducts
its affairs, and intends to continue to conduct its
affairs, so that the Company’s ordinary shares can
qualify to be considered as a mainstream investment
product and can be recommended by Independent
Financial Advisers (IFAs) to ordinary retail investors
in accordance with the rules of the FCA in relation
tonon-mainstream investment products.
This document is important and requires your
immediate attention.
Investor disclosure document
The UK Alternative Investment Fund Managers
Regulations require certain information to be
madeavailable to investors prior to their making
aninvestment in the Company. The Company’s
Investor Disclosure Document is available for
viewingat shinnippon.co.uk.
If you reside in the United Kingdom and you are
in any doubt as to the action you should take, you
should consult your stockbroker, bank manager,
solicitor, accountant or other independent financial
adviser authorised under the Financial Services and
Markets Act 2000 immediately. If you are outside the
United Kingdom you should consult an appropriately
authorised financial adviser.
If you have sold or otherwise transferred all of your
ordinary shares in Baillie Gifford Shin Nippon PLC,
please forward this document, together with
accompanying documents, but not your personalised
Form of Proxy, as soon as possible to the purchaser
or transferee, or to the stockbroker, bank or other
agent through whom the sale or transfer was or
isbeing effected for delivery to the purchaser
ortransferee.
01
Baillie Gifford Shin Nippon PLC
Contents
Introduction
Financial highlights 02
An introduction to Baillie Gifford Shin Nippon PLC 04
Strategic report
Chair’s statement 07
Managers’ report 10
Baillie Gifford’s stewardship principles 16
Proxy voting 18
Environmental, social and governance engagement 19
One year summary 24
Five year summary 26
Ten year record 28
Review of investments 30
Portfolio executive summary 37
Baillie Gifford – valuing private companies 40
Portfolio by growth profile
42
List of investments 43
Business review 46
Governance report
Directors and management 58
Directors’ report 63
Corporate governance report 68
Audit Committee report 75
Directors’ remuneration report 78
Statement of Directors’ responsibilities 82
Financial report
Independent Auditor’s report 85
Income statement 92
Balance sheet 93
Statement of changes in equity 94
Cash flow statement 95
Notes to the Financial Statements 96
Shareholder information
Notice of Annual General Meeting 113
Further shareholder information 118
Communicating with shareholders 121
Third party data provider disclaimer 123
Sustainable Finance Disclosure Regulation 124
Glossary of terms and Alternative Performance Measures 125
Company information 129
Introduction
Annual Report and Financial Statements 2026
02
Financial highlights
Year to 31 January 2026
† Net asset value per share (‘NAV’) with borrowings at fair value. At 31 January 2026 the NAV with borrowings at fair value was the same as the NAV with
borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 125 to 128.
*
Alternative Performance Measure – see Glossary of terms on pages 125 to 128.
#
The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms).
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
Total returns
*
J
2025
F MAMJ JASONDJ
2026
●
Share price
●
NAV
†
●
Comparative
index
#
80
90
100
110
130
120
NAV, share price and comparative index
(figures rebased to 100 at 31 January 2025)
Discount
*
(plotted as at month end dates)
J
2025
F MAMJ JASONDJ
2026
●
Discount
0%
20%
5%
15%
10%
Share price
14.4%
NAV
†
5.4%
Comparative
index
#
21.5%
Baillie Gifford Shin Nippon PLC
03
Introduction
Annual Report and Financial Statements 2026
04
Investing in new
opportunitiesin Japan.
Shin Nippon’s objective
isto pursue long term
capitalgrowth through
investment principally in
smallJapanese companies
which are believed to have
above average prospects
for growth.
An introduction to
Baillie Gifford
Shin Nippon PLC
Japan is the world’s fourth largest economy, home
to unique technologies and an emerging class of
digital disruptors. Our patient long-term approach
allows us to benefit from those at the vanguard of
innovation and entrepreneurialism. There are plenty
of examples to be found in areas such as robotics
and automation, or in the manufacturing of complex
electronic components, where Japan retains its
technical edge. Less obvious, are the emerging class
of entrepreneurs that are helping the country tackle
its digital transition. Japan is also home to some of
the world’s best-known brands, many of which are
primed to benefit from the premiumisation trend
within Asia, from rising wealth across the region.
These are just some of the opportunities emerging
for selective bottom-up stock pickers within Japan.
Time is our greatest asset
Adopting a long-term approach allows us to frame
investment opportunities differently to the rest of
themarket. We consider the unique attractions of
individual companies, and we do so over five-year
time periods and beyond. This long-term focus
enables us to forgo the short-term fluctuations
ofmarkets, cycles and share prices – to unearth
exploitable and under appreciated opportunities
that will ultimately deliver long-term outperformance.
Baillie Gifford Shin Nippon PLC
05
Flexible approach to growth investing
Growth can come in various guises, from companies
of all shapes and sizes. As such our portfolio is
built,from the bottom-up, with a diversified mix of
companies from across many sectors and industries.
The commonality is that each investment must
present a plausible pathway to doubling in value over
a five-year period. Of course, there are various ways
to climb a mountain – be that through a gradual
(compounding) approach, or via a more vertical
(exponential) axis.
By focusing on businesses with attractive structural
growth opportunities, with strong and sustainable
competitive positions, high-quality earnings and
aligned management we will optimise our exposure
to Japan’s best of breed growth opportunities.
Our
structure
Public company
• Just like other public
companies, Shin Nippon
can borrow money to make
additional investments.
Thisfinancial gearing can
amplify investment returns.
• Our shareholders have rights,
and we seek their approval,
via votes, if we want to make
significant changes.
• The board of directors looks
after the interests of our
shareholders. They meet
several times a year and
are responsible for various
things, such as overseeing
performance.
Accessibility
• Listed on the London Stock
Exchange, Shin Nippon
provides intra-day liquid
access, and our shares are
openly tradeable for investors
from around the world.
• There are no performance
fees or minimum investment
restrictions.
• Shareholders could benefit
from simplified tax reporting
when compared with other
structures that hold private
companies.
Permanent capital
• The closed-ended structure
provides a pool of permanent
capital. Unlike open-ended
funds, the portfolio remains
intact and is not impacted
byshareholder demand.
• We have the freedom to invest
for the long term and hold
assets that can be harder
tobuy and sell – such as
private companies.
• Our extended time horizons
arematched by our
companies. This alignment
underpins the prospect of
enduring relationships.
This strategic report, which
includes pages 6 to 56 and
incorporates the Chair’s statement
has been prepared in accordance
with the Companies Act 2006.
Strategic
report
07
Baillie Gifford Shin Nippon PLC
Chair’s
statement
Performance
Despite achieving positive absolute returns, I am
sorry to report that over the twelve months to
31 January 2026, the Company’s poor relative
performance has continued. Net asset value total
return was 5.4%
*
and the share price total return
was 14.4%. The MSCI Japan Small Cap Index (total
return in sterling terms) increased by 21.5%.
Investing for capital growth from Japanese smaller
companies has continued to be challenging. The
portfolio’s focus on high-growth, domestically-
oriented small caps has been out of favour as value
stocks, large exporters and AI-related mega-caps
have dominated returns in Japan. Rising interest
rates, a weak yen and significant valuation de-
rating across small-cap growth stocks in Japan have
further weighed on performance, despite many
holdings continuing to grow earnings strongly.
Mistakes have certainly been made. Following
challenge from the Board, and open constructive
dialogue with the Managers, lessons have been
learnt. Past portfolio construction underestimated
correlations between certain growth holdings,
exacerbating the impact of market-wide de-rating
and a shrinking opportunity set at the point of initial
investment. As covered in my interim statement,
the investment process has been refined to reflect
these insights, along with accessing a broadened
opportunity set at point of initial investment,
improved position sizing and a sharper focus on
resilience as well as growth.
While the recent period has further tested patience,
the Board continues to believe the portfolio is
invested in one of the most overlooked areas of global
equity markets, with valuations at near decade lows
and long-term growth opportunities intact.
* After deducting borrowings at fair value. For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
Jamie Skinner
Chair
Appointed 2018
Chair in 2023
Strategic report
08
Annual Report and Financial Statements 2026
Portfolio managers
In May 2025, Brian Lum was promoted from deputy
portfolio manager to lead portfolio manager,
replacing Praveen Kumar. Jared Anderson was
also appointed deputy portfolio manager. While
remaining committed to their long-term investment
approach, Brian and Jared have made a number of
changes to the portfolio since their appointment.
These changes reflect their views of the best
Japanese small cap growth companies and take
advantage of the changes to the Company’s
investment policy announced in 2025, which
broadened the investable universe to reflect the
opportunity set. Since then, there have been
five positions initiated in companies with market
capitalisation in excess of ¥150 billion (the upper
restriction prior to the changes to the investment
policy) and twelve complete exits, including
Moneytree, which was an unquoted holding. In
addition, there have been significant changes
to the size of a number of existing holdings with
position sizing forming an important element of the
portfolioreview.
Further details on the transactions, current portfolio
positioning and prospects for the portfolio are
contained within the portfolio managers’ report.
15% Tender, Continuation Vote in 2028 and
100% Performance Triggered Tender
During the final quarter of 2025, the Board
undertook a consultation exercise with shareholders
representing in excess of 43% of the Company’s
issued share capital. While those shareholders
shared the Board’s frustration with the continued
poor performance, many recognised the unique
opportunity offered by the Company, being the
only investment trust offering dedicated exposure
to small cap growth companies in Japan, and
were supportive of the mandate continuing to be
pursued. They, and the Board, also believed that
the incumbent portfolio managers should be given
an appropriate amount of time to demonstrate the
efficacy of the changes made to the portfolio.
Consequently, and looking to balance the views of
different shareholders, the Board sought and, on the
18 February 2026, obtained shareholder approval
to: undertake a tender offer for up to 15% of the
Company’s issued share capital in Q1 2026; remove
the 2027 performance triggered conditional tender
offer for up to 15% of the Company’s issued share
capital; introduce a performance triggered tender
offer for up to 100% of the Company’s issued share
capital, which will be undertaken if the Company’s
net asset value total return does not equal or exceed
the total return on the MSCI Japan Small Cap Index
(in sterling terms) over the five year period from
31December 2025 to 31 December 2030; and put a
one-off continuation vote to shareholders in 2028.
The 15% tender offer has taken place and was
oversubscribed, with 49.8% of the Company’s
issued share capital tendered. On 20 March 2026,
payments were made, in lieu of the tendered
shares, through CREST and cheques despatched to
certifiedshareholders.
Ongoing Charges and Management Fee
The Company’s ongoing charges ratio for the year
was 0.81% compared to 0.80% last year.
It has been agreed with the Managers that the
annual management fee paid, with effect from
1February 2026, will be 0.65% on the first £250m
of the Company’s net assets and 0.55% on the
remainder. It had previously been 0.75% on the first
£50m of net assets, 0.65% on the next £200m of
net assets and 0.55% on the remainder.
Buybacks and Discount
Following shareholder approval at last year’s Annual
General Meeting (‘AGM’), in August 2025 the
Scottish Court of Session approved the Company’s
application to cancel its share premium account
and the creation of an equivalent Distributable
Capital Reserve of £260.3 million. This provides a
significant pool of reserves which can be used to
fund distributions, including dividends, and returns
of capital, such as tender offers and share buybacks.
As at 31 January 2026, the Company’s share price
stood at a 7. 5% discount to the NAV per share
compared to 14.6% as at 31 January 2025. Over
the financial year, the Company has bought back
approximately 34.2 million shares, which are held
in treasury, equivalent to approximately 12.2% of
the Company’s issued share capital. Since then
and excluding the shares bought back as part of
the recent 15% unconditional tender, a further
2.8million shares have been purchased. The Board
will continue to authorise the use of buy backs if the
discount to NAV is substantial in absolute terms or in
relation to its peers.
09
Baillie Gifford Shin Nippon PLC
Borrowings
The Company has a ¥16.1bn secured revolving
credit facility with Bank of America, which matures
in November 2027. At present, ¥14.84bn is drawn,
compared to ¥16.1bn a year ago, with net gearing
standing at 14.9% as at 31 January 2026 compared
to 16.1% a year earlier.
Dividend
Revenue return per share was 0.77p compared to
0.67p the prior year. The Board is recommending
a final dividend of 0.69p per share (0.60p – 2025),
being broadly the minimum required to maintain
investment trust status. The proposed final dividend
will be put before shareholders as part of the
Company’s AGM business in May. I should add
that, as the Company’s focus is on capital growth,
shareholders should not rely on their investment in
the Company to provide any income.
Annual General Meeting
This year’s AGM will take place on Thursday 21 May
2026 at the ICAEW, Chartered Accountants’ Hall,
1 Moorgate Place, London EC2R 6EA commencing
at 11.30am. The AGM is an important opportunity
for engagement, giving shareholders the chance
to meet and ask questions of the Directors and the
portfolio managers, and vice versa. I very much hope
to see as many of you there as possible.
Outlook
During the year, the Board undertook its triennial
trip to Japan. The trip allows the Directors to
assess the portfolio managers in action first hand,
along with the quality of current and potential
investments. It also provides an insight to the mood
on the ground of management teams, providing a
useful perspective. Utilising a twin-track approach,
the Directors met with a total of 35 companies in
aggregate over the course of five days.
Based in part on the learnings from this trip, despite a
prolonged period of weak sentiment and challenging
market conditions, it appears that the outlook for
long-term capital growth from investments in Japanese
smaller companies remains attractive. Growth
investing and domestically oriented small caps have
been out of favour, particularly amid a weaker yen,
rising interest rates and a strong market preference
for value stocks. However, the Board and Managers
believe this backdrop remains a compelling opportunity
for patient investors.
Japan is confronting structural pressures that are
driving meaningful change. Labour shortages,
demographic challenges and entrenched
inefficiencies are forcing companies to rethink
how they operate. Smaller, more entrepreneurial
businesses are often best placed to respond, using
digitalisation, automation and new technologies to
improve productivity and scale their businesses.
Artificial intelligence, in particular, is emerging as
a powerful enabler across a wide range of sectors,
helping companies remove bottlenecks and expand
growth potential.
The Japanese small-cap universe remains broad
and underexplored, offering access to specialist
businesses operating in niche markets, often
protected by local regulation, culture or technical
expertise. Many portfolio companies are delivering
growth well ahead of the broader market, yet
valuations remain depressed following an extended
period of de-rating.
Despite the troubled times we live in and the current
market volatility, the Board remains confident that
disciplined, long-term investment in high-quality
Japanese smaller companies offers the potential for
attractive capital growth over time.
Jamie Skinner
30 March 2026
Strategic report
10
Annual Report and Financial Statements 2026
Managers’ report
In May 2025, Jared Anderson and I became the
respective new deputy and lead portfolio managers
for Baillie Gifford Shin Nippon. Given the portfolio’s
poor performance in recent times, we are under no
illusion regarding the challenge that awaits us, and we
acknowledge that shareholders’ patience has been
severely tested.
We have subsequently reviewed the portfolio
comprehensively, implemented modifications to the
portfolio construction process, and made numerous
changes to the portfolio. What remains unchanged
though, is our fundamental commitment to invest
in a portfolio of high growth smaller companies in
Japan with a genuinely long-term mindset, and we
are optimistic in our prospects given the underlying
operating performance of the portfolio companies and
the attractive valuations on offer.
Annual review
While it gives us some comfort to see Shin Nippon
deliver its first positive annual NAV (and share price)
returns for 5 years, we are nevertheless acutely aware
of the scale of our underperformance relative to
the MSCI Japan Small Cap (‘MXJPSC’) index in the
past 12months, a period during which the portfolio
continued to face heavy stylistic headwinds.
The increasing interest rate in Japan meant growth
stocks’ intrinsic valuations suffered as future profits
are discounted more heavily. In addition, the ongoing
push for corporate governance reform, where
companies are heavily encouraged to place more
emphasis on shareholder returns, has given the
strongest share price boost to Japan’s most poorly
run listed companies. Faced with pressure from
the regulators and activist investors, many such
companies have responded by unwinding cross
shareholdings and announcing record buybacks
and dividends. Aportfolio built around high growth,
typically better-managed businesses did not benefit to
the samedegree.
Brian Lum
Investment Manager
Appointed 2025
Jared Anderson
Deputy Manager
Appointed 2025
11
Baillie Gifford Shin Nippon PLC
The result is that value stocks overwhelmingly
outperformed growth stocks in the past year – to give
an illustration of this dynamic, MSCI Japan Value
outperformed MSCI Japan Growth by 15 percentage
points in the calendar year 2025 – and Shin Nippon is
positioned much further along the growth spectrum
than Japan’s growth indices.
The other headwind is the weak yen, which, despite
some strengthening during the summer of 2025,
subsequently returned to near historic lows relative
to the dollar as the market reacted to the election
of Sanae Takaichi as Japan’s prime minister in
October. Our portfolio is skewed towards domestic
growth companies, which typically suffer as a weak
yen stimulates cost inflation and hurts domestic
consumption.
On a more anecdotal note, the level of interest
towards individual Japanese small caps from
institutional investors remains low. As someone
who has met Japanese companies regularly at our
Edinburgh office for a decade, it is striking to me
that most visiting Japanese small companies have
struggled to secure any other investor meetings in the
past year – this was not the case in the past. Related
to this, executives (including those for our holdings)
are often genuinely puzzled (rather than apologetic)
by their company’s weak share price. To patient
investors like us, these reactions are illuminating.
Indeed, we derive confidence by observing the strong
fundamentals of our portfolio companies. Delivered
and expected growth for Shin Nippon’s portfolio
companies continue to be far superior to that of the
comparative index, both in terms of revenues and
profits. For example, market estimates suggest that
the portfolio will grow sales and earnings by 12.9%
and 18.6% respectively on a one-year forward basis.
The equivalent figures for the comparative index
are 3.5% and 11.8%. Longer term projections show
a similar dynamic. In the meantime, the portfolio
continues to trade at a valuation discount in terms of
EV/EBIT multiple (Enterprise Value/Earnings Before
Interest and Tax); 11.1x for the portfolio vs 12.5x for the
comparative index.
Process Improvements
While we remain true to our growth and long-term
orientation, we also recognise that mistakes have
been made in recent years. For example, with the
benefit of hindsight, the portfolio was invested in
too many stocks that were driven by a narrow set
of growth drivers (such as digitalisation), and the
subsequent correlated derating (deserved or not) hurt.
The weighting of a stock in the portfolio should be
commensurate with its potential upside, the absolute
downside risk and its correlation with the rest of
theportfolio.
With these in mind, we have implemented a position
sizing framework which divides our portfolio
companies into four types of growth profiles
(Emerging Prospects, Rapid Scalers, Cyclical Gainers,
and Proven Winners); and three tiers of conviction
levels, as shown by the table below.
Relative conviction (RADAR)
Growth profiles
Emerging Prospects
Earnings
Time
Rapid Scaler
Earnings
Time
Cyclical Gainers
Earnings
Time
Proven Winner
Earnings
Time
Strong 0.6 – 1.5% 2.5 – 5% 2.5 – 5% 3+%
Solid 0.4 – 0.6% 1 – 2.5% 1 – 2.5% 2 – 3%
Base <0.4% 0.5 – 1% 0.5 – 1% <1 – 2%
Strategic report
12
Annual Report and Financial Statements 2026
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
The four growth profiles give a sense of a company’s
level of maturity and absolute risk profile. Emerging
Prospects are companies with unproven business
models, and sometimes in the loss-making or even
pre-revenue phase. These are high risk, high impact
investments that should be small positions. The
next category along the maturity spectrum is Rapid
Scalers – these typically founder-led companies are
at the most exciting stage of scaling into what are still
immature markets, and this category can be thought
of as the engine room of the portfolio. Then we have
Cyclical Gainers, established companies which enjoy
structural growth tailwinds, but nevertheless operate
in viciously cyclical industries (such as semiconductors
or capital equipment) where a degree of caution on
position sizing is warranted. Finally, we have Proven
Winners, which are above-average growth companies
with proven business models, strong market positions,
and decent or improving financials. These are the
larger positions. Jared and I monitor the portfolio on
a regular basis using this framework as a guideline
– corporate developments, further investment
research, or share price movements may prompt
us to re-evaluate a stock’s growth classification,
our conviction levels, and therefore the optimal
portfolioweighting.
This process helps us 1) sharpen our research and
engagement efforts (each growth profile demands a
different focus), 2) improve buy & sell discipline, and
3) also enables us to systematically recognise the
growth milestones of our companies (e.g. is this Rapid
Scaler now a Proven Winner?). As growth investors,
we will never lose sight of the possibility of unearthing
the next megacaps – having a framework that
recognises this is a part of this.
Additionally, we have been working more closely
with our internal risk team and adopted various risk
tools to monitor portfolio correlations and risk factors
better. Our primary focus daily remains centred around
picking the best growth stocks. However, we believe
these additional considerations will lead to better
aggregate performance outcomes in the long-term.
Portfolio updates
There are several broad directions to highlight.
Firstly, we have taken advantage of our new ability
to invest in companies with market capitalisation
of above ¥150b. New buys Seiko Group (the watch
company, a ‘Proven Winner’), JMDC (a healthcare
big data company, a ‘Rapid Scaler’), Kasumigaseki
Capital (a real estate company with an unusual
asset light business model, also a ‘Rapid Scaler’),
DMG Mori (a leading high precision machine tools
company, a ‘Cyclical Gainer’), and Money Forward
(acloud-based software company that automates
back office workflow such as accounting, another
‘Rapid Scaler’) are all such examples. We have
long admired some of these names and believe
these are all exciting investment cases individually.
At a portfolio level, historically we have displayed
a significant bias towards the small end of the
comparative index. While we expect this stylistic
tilt to remain given our growth style, these latest
additions have incrementally narrowed our
difference to the benchmark.
More importantly, they represent a diverse range
of growth profiles, driven by different themes. For
example, the investment case for Seiko Group
hinges on structural premiumisation of its product
mix, which is shifting gradually from affordable
battery watches to luxury Grand Seiko timepieces
which retail for over £5,000. Kasumigaseki Capital
– the real estate development company – focuses
on specific niches such as cold chain storage
and group stay hotels in Japan and beyond,
opportunities with esoteric dynamics which the
innovative management team has identified. DMG
Mori – a result of a historic merger between a
Japanese company and a German company – is not
only a play on factory automation but also offers a
degree of exposure to the growing aerospace and
defence sector in Europe and Japan.
Concurrent with implementing the position sizing
framework articulated above, we have also made
the decision to exit several positions that do
not make the cut in terms of conviction levels.
Some were successful investments where we
felt significant future upside was unlikely – these
include long-term holding MonotaRO (the B2B
e-commerce company) and MatsukiyoCocokara
(thepharmacy chain). Others were investment cases
that have not developed as we had hoped, such
as Kumiai (the agricultural chemicals company),
Avex (theentertainment agency), Cellsource
(aregenerative medicine company) and Demae-
Can (the food delivery platform). Another is oRo
(aSoftware-as-a-Service company) which correlated
highly with other similar holdings in the portfolio,
13
Baillie Gifford Shin Nippon PLC
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
but one we felt may be less resilient to potential
AI disruptions in the long-term. Two holdings,
TechnoPro (IT consultancy) and Moneytree (unlisted
fintech), were acquired by third parties during the
year, resulting in the Fund exiting these positions.
The number of stocks in the portfolio has reduced
to 63 as at the end of the Company’s financial
year, approaching the 50-60 holding range which
we see as the optimal on an ongoing basis in
terms of research depth and more meaningful
corporate engagement. There are currently three
private companies held, accounting for 1.8% of
the portfolio. Our experience of investing in private
companies has in aggregate been poor and it is likely
that the main area of our focus for the foreseeable
future will be on listed companies.
Beyond new buys and complete exits, we have
adjusted existing positions to align with the
framework discussed above. Most of the changes
are down to individual bottom-up factors, but one
noteworthy theme is of course the rise of Artificial
Intelligence (AI). Japanese Small Caps may not
be the first place to look for AI winners, but this
is precisely the opportunity. Over the past year,
wehave added to the likes of JEOL and Kohoku
Kogyo. These are just two examples amongst a
group of ‘Hidden AI Champions’ in the portfolio –
lowprofile companies with strong market positions
that either supply into the AI supply chain or address
AI-induced bottlenecks. For example, while JEOL is
better known for selling microscopes to universities,
it is also the global leader in Multi-Beam Mask
Writers – an essential piece of equipment used
in the production of the world’s most advanced
semiconductor chips. Kohoku Kogyo is the dominant
producer of ‘optical isolators’ – a mission critical
component deployed in subsea communication
cables that are also used by datacentres – which
is the company’s second most important product
in revenue terms but serves as its key profit driver.
These are not well-known companies for global
investors seeking to gain exposure to the AI theme,
and we believe they are underappreciated by
themarket.
The portfolio segmented by growth profiles can
be found on page 42 of the Annual Report. The
company’s net gearing decreased marginally to15%.
Performance
For the year ended 31 January 2026, Shin Nippon’s
NAV total return increased by 5.4% compared to
an increase of 21.5% in the comparative index
(all figures total return and in sterling terms, NAV
with borrowings at fair value). Over three and
five years, the Company’s NAV (total return) has
declined by 14.9% and 36.1% compared to an
increase of 40.7% and 42.4% respectively for the
comparativeindex.
For the year, Tsugami was our top contributor.
Tsugami (a Cyclical Gainer) is a precision machine-
tool maker founded in 1937, best known for products
such as automatic lathes and precision grinding
machines. It entered the Chinese market in the
1990s and today derives most of its sales through its
listed Chinese subsidiary Precision Tsugami. While
automotive is the key industry for Tsugami, itis
also exposed to emerging fields such as humanoid
robotics and AI infrastructure, which helped drive
strong profit growth in the past year. In recent years,
it has started to invest aggressively in India, which it
sees as the next key growth market for the company,
potentially following Precision Tsugami’s trajectory in
the long run.
Raksul – the procurement and marketing platform
targeting small businesses in Japan – was also
a significant positive contributor to portfolio
performance. We have invested in Raksul since its
IPO in 2018, and it has since achieved sales CAGR
of over 27% (and profits ahead of that). Shares
jumped in December following the announcement
that the management and Goldman Sachs proposed
to take the company private at ¥1710, a 37%
premium relative to the pre-announcement share
price. We believe the tender offer price of ¥1710
severely undervalues the company. We have voiced
our opposition both with the Board of Directors, as
well as publicly. The tender offer price has since
been increased to ¥1900 and is set to go through at
time of writing in March 2026. This case highlights
1) the tremendous value that can found in the small
cap growth space, and 2) the premature ‘acquisition
risk’ for some of the best growth companies in
theuniverse.
Strategic report
14
Annual Report and Financial Statements 2026
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Inforich was our biggest detractor to performance.
Inforich (an ‘Emerging Prospect’), a start-up best
known for its network of over 80k mobile battery
rental stations globally, delivered sales growth
and operational profit growth of 35% and 24%
respectively in 2025, and is in an early phase of
overseas expansion. These are highly respectable
numbers, even if they fall short of the company’s
own ambitions a year ago. Unfortunately, the mix of
below-plan growth and its small market capitalisation
(which deterred most institutional investors) has led
to a sharp decline in its share price. As of March
2026, a tender offer is in progress that will see Bain
Capital take Inforich private at ¥4,560 per share,
more than double the company’s share price before
the tender offer announcement.
Given the broader market environment, it is no
surprise that the second biggest performance
detractor was another high growth company.
Appier, founded in 2012 by a team of AI scientists,
delivers Software-as-a-Service that helps its
business clients find and keep customers – think
of Appier’s AI tools as the brains to their clients’
marketing department if you will. The effectiveness
of Appier’s offering enabled it to consistently
deliver strong growth along with positive and rising
profitability. In 2025, it delivered strong sales
growth of 28% (32% on a FX neutral basis) and
operating income growth of 50%. Despite these
encouraging results, the shares have declined
due to concerns about its growth investments and
general weak sentiment toward software companies
based on AI disruption. While we acknowledge
the dynamism and unpredictability of the AI
landscape, we believe Appier’s prospects are still
underestimated by the market.
Concluding remarks
As the new lead portfolio manager for Shin Nippon,
which has now gone through a prolonged period of
severe underperformance, it is natural to reflect on
the validity of my and Jared’s investment approach
in this market and why we remain hugely excited by
growth investing in the Japan Small Cap universe,
despite our performance difficulties.
Firstly, Japan is a market that faces huge structural
issues: ageing demographics; a shrinking workforce;
and, persistently low labour productivity. These
are well-documented challenges, but for growth
investors and innovative companies (including
many portfolio holdings), they represent enormous
opportunities to scale into. For me, this is a far
more enticing long-term investment prospect than
aiming for a one-off capital efficiency uplift that has
driven the returns of value stocks in recent times,
especially after a period of dramatic performance
differential between growth and value.
Secondly, we acknowledge that growth companies
in Japan have not historically scaled as rapidly as
other innovative companies in the US or even Europe.
Onetypical bottleneck is human resources. It is hard
to hire enough top talent when employment for life
is the norm and when the population is shrinking.
Thischallenge may be falling away, as we are seeing
shifts in attitudes towards employment amongst the
younger generation. Then there is AI. AI may be seen
as a job-killer in some markets; in Japan, AIadoption
is necessary and can potentially be a catalyst for
the elusive much needed jump in productivity. Japan
may not be an AI superpower like the US or China,
but it could be one of the biggest AI beneficiaries.
Encouragingly, the Japanese government
recognisesthis.
Having stated earlier how higher interest rates
are hurting growth companies’ valuations, there
is a silver lining here. That capital now carries a
cost should benefit those that can deploy it most
effectively – i.e. high-quality growth companies.
Atone end of the spectrum, weak companies
sustained historically by zero-cost debt may struggle
and eventually exit, freeing up societal resources.
Atthe other end, those that provide the best
products and services will be able to exercise pricing
power more easily in an environment where inflation
has finally taken hold after decades of deflation.
Similarly, ongoing corporate reforms benefit the
whole market, as painful as that has been for us
in relative terms. A more competitive and dynamic
market should increase the chances of world class
growth companies emerging again from Japan – this
is exciting for growth investors in the long run.
I am hugely energised by the opportunity set
as a growth investor, and excited by what our
portfolio can achieve in the coming years. We have
companies that are addressing large growing market
opportunities, often with strong competitive edge
(as demonstrated by superior financials), and led by
aligned and ambitious management. Nearly 80%
of the companies have founder/founding family
involvement. Many of these are deeply overlooked in
an era of factor investing, and the pipeline of ideas is
equally rich and compelling.
15
Baillie Gifford Shin Nippon PLC
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
In the short term, we are mindful of the crisis in
the Middle East. Japan’s economy is particularly
vulnerable given its reliance on energy imports,
and a prolonged conflict raises the prospect of
stagflation in Japan. Despite the troubling headlines,
we believe that our portfolio is relatively resilient
given our bias towards fast moving domestically
orientated companies. We will monitor the situation
closely and adjust the portfolio accordingly.
We would like to thank our shareholders for their
continued support and patience. Jared and I will do
our utmost to deliver the returns that Shin Nippon
shareholders deserve in the coming years.
Brian Lum
Strategic report
16
Annual Report and Financial Statements 2026
Baillie Gifford’s
stewardship principles
Baillie Gifford’s overarching ethos is that we are
‘Actual’ investors. That means we seek to invest
for the long term. Our role as an engaged owner
is core to our mission to be effective stewards
for our clients. As an active manager, we invest in
companies at different stages of their evolution
across many industries and geographies, and focus
on their unique circumstances and opportunities.
Ourapproach favours a small number of simple
principles rather than overly prescriptive policies.
This helps shape our interactions with holdings
andensures our investment teams have the
freedomand retain the responsibility to act in
clients’best interests.
Long-term value creation
We believe that companies that are run for the
long term are more likely to be better investments
over our clients’ time horizons. We encourage our
holdings to be ambitious, focusing on long-term
value creation and capital deployment for growth.
We know events will not always run according to
plan. In these instances we expect management
to act deliberately and to provide appropriate
transparency. We think helping management to
resist short-term demands from shareholders often
protects returns. We regard it as our responsibility to
encourage holdings away from destructive financial
engineering towards activities that create genuine
value over the long run. Our value will often be in
supporting management when others don’t.
Alignment in vision and practice
Alignment is at the heart of our stewardship
approach. We seek the fair and equitable treatment
of all shareholders alongside the interests of
management. While assessing alignment with
management often comes down to intangible factors
and an understanding built over time, we look for
clear evidence of alignment in everything from
capital allocation decisions in moments of stress
to the details of executive remuneration plans and
committed share ownership. We expect companies
to deepen alignment with us, rather than weaken it,
where the opportunity presents itself.
17
Baillie Gifford Shin Nippon PLC
Governance fit for purpose
Corporate governance is a combination of structures
and behaviours; a careful balance between systems,
processes and people. Good governance is the
essential foundation for long-term company
success. We firmly believe that there is no single
governance model that delivers the best long-term
outcomes. We therefore strive to push back against
one-dimensional global governance principles in
favour of a deep understanding of each company
we invest in. We look, very simply, for structures,
people and processes which we think can maximise
the likelihood of long-term success. We expect to
trust the boards and management teams of the
companies we select, but demand accountability
ifthat trust is broken.
Sustainable business practices
A company’s ability to grow and generate value for
our clients relies on a network of interdependencies
between the company and the economy, society and
environment in which it operates. We expect holdings
to consider how their actions impact and rely on these
relationships. We believe long-term success depends
on maintaining a social licence to operate and look
for holdings to work within the spirit and not just the
letter of the laws and regulations that govern them.
Material factors should be addressed at the board
level as appropriate.
Strategic report
18
Annual Report and Financial Statements 2026
Baillie Gifford –
proxy voting
We believe that ‘active ownership’ of our clients’
holdings is as important as selecting the right
investments in the first instance. These guidelines
are aligned with our stewardship principles and
describe our approach to proxy voting and company
engagement, the key levers of active ownership,
often described as ‘stewardship’.
While these guidelines are intended to provide an
insight into how we approach voting on our clients’
behalf, it is important to note that we assess every
company individually. In voting, we will always
evaluate proposals on a case-by-case basis, based
on what we believe to be in the best long-term
interests of our clients, rather than rigidly applying
apolicy.
A broad cross section of our investment staff are
involved in our ongoing work on stewardship. In the
same way that our investment approach is based
around empowered and independent teams, our
voting and engagement is led by the individual
investment teams. In keeping with our decentralised
and autonomous culture, our investment teams will,
on occasion, elect to vote differently on the same
general meeting resolutions. Where this happens,
we report accordingly in the proxy voting disclosure
on our website. We also have clear processes in
place to identify, prevent and manage potential
proxy voting related conflicts of interest to ensure
that in all cases the firm acts in the clients’ best
interest. Baillie Gifford’s firm-wide conflict of interest
disclosure is available on our website.
Prior to taking any voting action, we usually address
specific ESG concerns by engaging directly with the
company, using voting as an escalation mechanism
ifwe have not seen sufficient progress. Voting
activity and the reasons for any resolutions voted
against in the period are disclosed on the Company
website and can be viewed at shinnippon.co.uk.
Company meeting record
Voting distribution
Number of meetings voted
withmanagement
68
Number of meetings with at least one
against, withhold or abstain
5
Meetings not voted*
4
* In the period, meetings not voted reflect
instances where the holding had been sold
prior to the vote date.
Votes for 94.3%
Votes against 0.3%
Votes abstained 0.5%
No vote 4.9%
19
Baillie Gifford Shin Nippon PLC
By engaging with companies, we seek to build constructive relationships with them, to better inform our
investment activities and, where necessary, effect change within our holdings, ultimately with the goal
ofachieving better returns for our shareholders. The issues we consider in our assessment of ESG factors
arevaried but may include governance arrangements, human rights, labour rights, diversity and inclusion,
climate change, nature and biodiversity, respect for legal and regulatory guidelines and consideration
ofstakeholder perspectives.
Environmental, social and
governance engagement
Engagement Topics
● Environmental ● Social ● Governance
Number of engagements
0
5
10
15
20
25
30
Climate
Shareholder rights
Business conduct
Remuneration
Pre-AGM
Board independence
Board diversity
Governance of strategy
Corporate culture
Proxy voting
Board effectiveness
and leadership
Engagement Themes
0
20
40
60
80
100
EnvironmentalSocialGovernance
%
The examples on the following pages demonstrate our approach to proxy voting and stewardship through
constructive, ongoing engagement.
Strategic report
20
Annual Report and Financial Statements 2026
GMO Payment Gateway – Engagement case
study: encouraging long-term strategic
focus and governance clarity.
% of total assets* 0.7%
Objective: To discuss the company’s long-term strategic
trajectory and 2030 operating profit ambitions with the
founder and CEO, Issei Ainoura, explore the implications
of leadership tenure for culture and succession planning,
and encourage a greater emphasis on long-term value
creation over annual profit targets.
Discussions: Ainoura-san described GMOPG as a strongly
sales-led organisation. He noted the monthly meetings,
where he reviews progress against target customers and
reiterated GMOPG’s highly ambitious financial goals,
including a strong emphasis on achieving 25 per cent
annual operating profit growth alongside a long-term
operating profit target for 2030.
We reiterated our preference for directing the market’s
attention to the company’s long-term direction and
progress against its 2030 objectives, rather than focusing
on slight year-on-year variations in operating profit growth.
We highlighted how an excessive focus on short-term
performance can distort internal behaviour, even as we
recognise the range of stakeholders he needs to manage
and the impressive ambition that this goal represents.
We asked whether achieving the ¥100 billion operating
profit target in 2030 might be a natural point for him to
transition to a chair role. He framed the 2030 target as
merely a way marker and expressed a desire to continue
“like Buffett,” signalling both personal ambition and a
clear intention to remain chief executive officer (CEO).
Wediscussed our view that long tenure is not inherently
problematic, provided there is a precise mechanism for the
CEO to understand when the time is right for change.
Outcome: Following our meeting, management refined
its profit-growth messaging and shared that this was
partly informed by our feedback. Itshifted from an annual
profit growth-rate objective to a profit point target for the
2031 financial year, intended to more clearly articulate
the growth drivers, visibility, and strategic initiatives
underpinning this ambition.
We view this evolution as well aligned with our long-term
investment horizon. The meeting and follow-up
communication reinforced our view that management is
aligned with our investment horizon through its approach,
culture, and governance.
Toyo Tanso: Advancing governance and
sustainability through board reform and
emissions reduction.
% of total assets* 1.8%
Objective: To assess progress on board reform and
governance effectiveness, encourage greater international
expertise at board level given the company’s global revenue
exposure, and evaluate the credibility and ambition of its
emissions-reduction and broader sustainability initiatives,
alongside capital allocation discipline.
Discussion: Toyo Tanso is a global leader in the production of
speciality graphite materials, supplying high-performance
components used in semiconductors, electric vehicles, and
industrial applications.
We met with Toyo Tanso’s Chairman and CEO to discuss the
company’s sustainability initiatives, capital allocation
strategy, and broader business developments. The
conversation primarily focused on board composition and
progress toward reducing emissions.
The leadership team outlined steps taken to enhance the
independence and expertise of the board, including a
reduction in board size from eight members to four over the
past four years. This change aims to foster greater
accountability and more effective governance. Given Toyo
Tanso’s significant ex-Japan revenue exposure, we also
explored the need for greater international business
expertise within the board. Management was receptive to
this idea and expressed an intention to strengthen global
perspectives as the board evolves.
On environmental progress, Toyo Tanso highlighted its efforts
to lower emissions through the adoption of more
energy-efficient technologies and a shift toward renewable
energy sources. The company has set a target to reduce
emissions intensity by 30% by 2030. However, they
acknowledged ongoing challenges in hard-to-abate areas
such as carbon baking furnaces.
The discussion also covered human rights initiatives. Toyo
Tanso has completed a due diligence exercise starting with
its parent company and plans to extend this work across its
group operations and supply chain. The company’s approach
is to build domestic competence first before expanding
oversight into higher-risk international tiers.
Finally, we revisited our voting decision from the previous
year regarding dividend policy. We had abstained on the
proposed payout of around 30%, which fell short of our
40% expectation given the company’s strong cash position.
The company acknowledged this feedback and confirmed
that it is currently reviewing its payout framework as part of a
broader capital allocation strategy.
Outcome: The meeting underscored Toyo Tanso’s openness
to external perspectives and its willingness to adapt. The
company is continuing to refine its governance structure,
strike a balance between reinvestment and shareholder
returns, and make progress on sustainability, although some
operational challenges remain in achieving its
environmentaltargets.
21
Baillie Gifford Shin Nippon PLC
Nakanishi – Addressing governance gaps
through stronger tax oversight.
% of total assets* 1.6%
Purpose: To understand the root causes of the overseas
tax underpayment, assess the adequacy of remedial
actions taken to strengthen internal controls and
international tax oversight, and ensure governance
frameworks are robust enough to prevent recurrence and
maintain shareholderconfidence.
Discussion: Nakanishi is a leading manufacturer of
high-precision dental and industrial rotary instruments.
During a meeting with the CFO of Nakanishi, we sought to
understand the circumstances surrounding Nakanishi’s
recent tax underpayment issue and evaluate the
company’s response and corrective measures.
Before our meeting, we became aware that Nakanishi had
been required to pay an additional ¥1.2 billion in taxes and
penalties following an underpayment identified across its
overseas entities. During our conversation, Suzuki-san
acknowledged the issue and offered an apology,
explaining that the root cause lay in a lack of specialised
international tax expertise within the company.
At the time, Nakanishi relied on a domestic Japanese
third-party accounting firm, which had incorrectly handled
certain overseas tax filings. Recognising this gap, the
company has since taken steps to strengthen its internal
financial governance. These include hiring an in-house
international tax advisor and appointing PwC as its new
external tax consultant to improve compliance and
oversight going forward.
Outcome: Nakanishi has already settled the ¥1.2billion
payment and appears to have addressed the shortcomings
in its tax management structure. From the discussion,
itwas clear that this was a case of administrative oversight
rather than deliberate misconduct. The company’s
response demonstrates a commitment to improving
governance and restoring confidence in its
financialcontrols.
Strategic report
22
Annual Report and Financial Statements 2026
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Proxy voting – ‘active ownership’ in action
JEOL
% of total assets* 3.3%
Meeting 2025 Annual General Meeting
Vote Abstain
Reason: We abstained on the dividend because we believe
the company could return more capital to shareholders, given
its strong cash position. Ahead of the AGM, we reached out
to the company to understand its stance on shareholder
returns. They informed us that their policy is to maintain a
payout ratio of 30 per cent. In previous years, we opposed the
company’s dividend. However, this year, we decided to
abstain to acknowledge the absolute increase in the dividend
and recognising the cyclical weakness the company has
faced in recent quarters due to challenges in their industry.
Shinnihon
% of total assets* 1.2%
Meeting 2025 Annual General Meeting
Vote Abstain
Reason: We abstained on the resolution to approve the
granting of a retirement bonus to an inside director
because details such as the amount and the recipient were
not disclosed. Ahead of the AGM, we contacted the
company to request additional information, however,
thecompany did not respond. Generally, in Japan,
retirement bonuses are calculated based on tenure and
not the recipient’s contribution to shareholder value. As we
generally think remuneration should be reflective of an
individual and the company’s performance, due to an
absence of information we could not make an informed
judgement and decided to abstain.
Kohoku Kogyo
% of total assets* 2.6%
Meeting 2025 Annual General Meeting
Vote Against
Reason: We continued to oppose the low dividend payment
because we believe the company’s capital strategy is not in
shareholders’ interests. Ahead of the AGM, we reached out
to the company to understand its stance on shareholder
returns. They explained that they implemented a share
buyback programme, which we believe will increase the
company’s total return ratio for the next fiscal year. While
we welcomed this news, we decided to continue to oppose
the dividend due to shareholder returns in the current fiscal
year being below our expectations. This was consistent with
our previous voting approach. We hope to feel able to
support the dividend proposal at the 2026 AGM.
23
Baillie Gifford Shin Nippon PLC
Strategic report
24
Annual Report and Financial Statements 2026
31 January
2026
31 January
2025 % change
Shareholders’ funds £358.8m £389.7m
Gearing
†
15% 16%
Net asset value per ordinary share
‡
146.3p 139.4p 4.9
Share price 135.4p 119.0p 13.8
Comparative index
#
21.5
Yen/sterling exchange rate 211.68 192.41 (9.1)
Discount
†
7. 5% 14.6%
Revenue earnings per ordinary share 0.77p 0.67p 14.9
Dividend proposed per ordinary share
in respect of the financial year
0.69p 0.60p 15.0
Ongoing charges
†
0.81% 0.80%
Active share
†
97% 97%
Year to 31 January 2026 2025
Total return (%)
†
Net asset value 5.4 (5.1)
Share price 14.4 (5.0)
Comparative index
#
21.5 8.9
The following information
illustrates how Shin Nippon
hasperformed over the year
to31January 2026.
†
Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
‡
Net asset value per share (‘NAV’) with borrowings at fair value. At 31 January 2026 the NAV with borrowings at fair value was the same as the NAV with
borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 125 to 128.
#
The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms).
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
One year
summary
25
Baillie Gifford Shin Nippon PLC
†
Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 125 to 128..
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
Year to 31 January 2026 2026 2025 2025
Year’s high and low High Low High Low
Net asset value per
ordinary share
(after deducting
borrowings at fair value)
†
152.8p 108.3p 150.4p 112.7p
Share price 138.4p 95.5p 126.8p 105.0p
Discount (after deducting
borrowings at fair value)
†
6.7% 16.9% 6.5% 18.6%
Year to 31 January 2026 2025
Net return per ordinary share
Revenue return 0.77p 0.67p
Capital return 4.22p (10.97p)
Total return 4.99p (10.30p)
Strategic report
26
Annual Report and Financial Statements 2026
* The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms).
†
See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
Five year
summary
Annual change in net asset value and share price total return
†
2026
2022
2023 2024 2025
Years to 31 January
● NAV total return (after deducting
borrowings at fair value)
†
● Share price total return
†
(30%)
20%
(10%)
0%
(20%)
10%
The following charts indicate
how an investment in Shin
Nippon has performed relative
toits comparative index, peer
group and its net asset value
over the five year period to
31 January 2026. The Board
reviews performance principally
over rolling five year periods.
Annual change in net asset value and share price
total return
†
relative to the comparative index
*
2026
2022
2023 2024 2025
Years to 31 January
● Relative NAV total return (after
deducting borrowings at fair value)
†
● Relative share price total return
†
(25%)
(15%)
(10%)
(20%)
(5%)
0%
(30%)
27
Baillie Gifford Shin Nippon PLC
Cumulative to 31 January
20262021 2022 2023 20252024
NAV total return (after deducting borrowings at fair value) in sterling terms
†
.
●
Shin Nippon
●
AVI Japan
Opportunity Trust
●
Nippon Active Value
40
60
100
120
140
160
180
220
200
80
Five year total return performance
†
(figures rebased to 100 at 31 January 2021)
Five year peer group total return
†
performance
#
(figures rebased to 100 at 31 January 2021)
20262021 2022 2023 20252024
Cumulative to 31 January
●
Share price
total return
†
●
NAV total return
(after deducting
borrowings at fair value)
†
●
Comparative
index
*
40
60
160
100
140
120
80
* The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms).
#
AIC peer group comprises: AVI Japan Opportunity Trust and Nippon Active Value Fund.
†
See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
Premium/(discount) to net asset value
(plotted on a quarterly basis)
Turnover
Years to 31 January
20262021 2022 2023 20252024
● Turnover
†
5%
25%
20%
15%
10%
Years to 31 January
20262021 2022 2023 20252024
● Shin Nippon premium/(discount)
†
-20
-15
-10
-5
0
5
10
Strategic report
28
Annual Report and Financial Statements 2026
Capital
At
31 January
Total
assets *
£’000
Bank loans
£’000
Shareholders’
funds
£’000
NAV per
share(fair) *
p
Share price
p
Premium/
(discount) *
%
2016 182,817 19,427 163,390 86.2 89.6 3.9
2017 257,448 23,576 233,872 115.5 119.6 3.5
2018 449,289 47,877 401,412 168.7 184.4 9.3
2019 486,101 51,946 434,155 158.5 171.2 8.0
2020 535,801 52,085 483,716 172.8 170.4 (1.4)
2021 761,251 63,199 698,052 231.5 244.0 5.3
2022 643,754 91,102 552,652 175.8 174.4 (0.8)
2023 633,466 88,013 545,453 173.7 158.8 (8.6)
2024 544,267 86,475 457,792 147.8 126.2 (14.6)
2025 473,366 83,676 389,690 139.4 119.0 (14.6)
2026 428,928 70,105 358,823 146.3 135.4 ( 7. 5)
Revenue Gearing ratios
Year to
31 January
Gross
revenue
£’000
Available
for ordinary
shareholders
£’000
Revenue
(loss)/earnings
per ordinary share
p
Ongoing
charges *
%
Gearing *
%
Gross
gearing *
%
2016 1,798 (290) (0.16) 1.02 9 12
2017 2,912 101 0.05 0.96 8 10
2018 3,496 (227) (0.11) 0.89 11 12
2019 5,092 106 0.04 0.77 11 12
2020 6,006 790 0.28 0.73 10 11
2021 5,587 (141) (0.05) 0.71 8 9
2022 7,436 896 0.29 0.66 11 16
2023 9,617 3,490 1.11 0.74 15 16
2024 8,870 2,944 0.94 0.72 18 19
2025 7,389 1,989 0.67 0.80 16 21
2026 7,052 1,981 0.77 0.81 15 20
Ten year
record
* See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
29
Baillie Gifford Shin Nippon PLC
Cumulative to 31 January
20262016 2018 2021 2023 20252017 20202019 2022 2024
● Share price total return* ● NAV (fair) total return*
● MSCI Japan Small Cap Index (total return and in sterling terms)
*
0
400
300
200
100
Cumulative performance (taking 2016 as 100)
At
31 January
NAV
pershare
†
Share
price
Comparative
index
#
2016 100 100 100
2017 134 133 135
2018 196 206 158
2019 184 191 145
2020 200 190 159
2021 269 272 168
2022 204 195 161
2023 202 177 170
2024 171 141 181
2025 162 134 197
2026 170 153 239
Compound annual returns (%)
5 year (8.8) (10.9) 7. 3
10 year 5.4 4.3 9.1
†
Net asset value total return has been calculated after deducting borrowings at fair value. See Glossary of terms and Alternative Performance Measures
on pages 125 to 128.
#
The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms).
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
All per share figures have been restated for the five for one share split on 21 May 2018.
Ten year total return performance
*
*
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123.
Past performance is not a guide to future performance.
Strategic report
30
Annual Report and Financial Statements 2026
Review of
investments
A review of the Company’s ten
largest investments together
witha list of the new acquisitions
in the year.
*
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Tsugami
Founded in 1937, Tsugami is a specialist
in high precision machine tools (such as
automatic lathes and grinding machines),
which are used to make complex
components with microns-level accuracy.
Ithas a long history, enjoys strong positions
in its niches, and benefits from megatrends
such as automation and miniaturisation of
electronic components. Having established
itself in China, where it continues to grow
strongly; it has recently established a
presence in India where there are exciting
growth prospects. We classify Tsugami to
be a ‘Cyclical Gainer’ in accordance with the
growth profiles set out on page 42.
Valuation £17,774,000
% of total assets* 4.1%
Valuation at
31 January 2025
£10,224,000
% of total assets
at 31 January 2025
2.2%
Net purchases/(sales)
in year to 31 January 2026
£118,000
Held since 2019
Top ten holdings
Valuation £17,333,000
% of total assets* 4.0%
Valuation at
31 January 2025
£11,479,000
% of total assets
at 31 January 2025
2.4%
Net purchases/(sales)
in year to 31 January 2026
£692,000
Held since 2018
Raksul
Raksul is an online platform providing cloud-
based printing and advertising services
for SMEs. The printing industry in Japan
is very sizeable albeit mature, and is quite
traditional. It is also very inefficient in that
a small number of printing companies get
a large chunk of customer orders leaving
smaller and mid-sized players with very low
capacity utilisation. Online penetration also
remains very low compared to other developed
markets. Through its online platform, Raksul
is attempting to modernise this industry by
using its platform to efficiently allocate orders
thereby improving utilisation rates across
the sector. Through its advertising business,
Raksul sells SAAS software that provides low-
cost and measurable advertising for SMEs.
The company is growing its sales very rapidly
and has built sufficient scale to improve its
profitability as well. Management are young
and dynamic, with most having both an
overseas and a consulting background. Raksul
is considered to be a ‘Rapid Scaler’.
31
Baillie Gifford Shin Nippon PLC
JEOL
JEOL is a specialist manufacturer of
high-powered microscopes and other
scientific analysis equipment. In addition,
through its partnership with IMS (an
Austrian company), JEOL participates in
manufacturing multi-beam mask writers
for the semiconductor industry, which has
proved to be a highly successful business.
Over the past few years, JEOL has
increased its margins in both microscope
and mask-writing businesses, driven by
new product launches and strong demand.
The company should be able to grow
revenues strongly, and defend its margins
through the cycle, thanks to its ongoing
technological developments and product
innovation. We consider JEOL to be a
‘Cyclical Gainer’.
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
GA Technologies
GA Technologies provides online B2B
(`business-to-business’) services for the
real estate sector. It has developed a suite
of artificial intelligence based software
applications that allows clients to manage
numerous tasks like remote viewing,
rental property management, end-to-end
processing of mortgages and automated
generation of building floor plans, to
name a few. It is run by its ambitious and
young founder who owns a large stake,
thereby ensuring strong alignment with
minority shareholders. GA Technologies is
classified as a ‘Rapid Scaler’.
Yonex
Yonex is the leading badminton racket brand
in the world. Badminton is growing as a
participation sport across Asia and many
of the top players use Yonex equipment.
The company is now leveraging its strong
brand to expand into the global tennis
market where it has already demonstrated
impressive market share gains, especially
in the US which is the world’s largest tennis
market. In addition, management have
moved to a direct sales model which should
support higher margins in the long run. We
see Yonex as a ‘Proven Winner’.
Valuation £14,042,000
% of total assets* 3.3%
Valuation at
31 January 2025
£12,617,000
% of total assets
at 31 January 2025
2.7%
Net purchases/(sales)
in year to 31 January 2026
£1,567,000
Held since 2013
Valuation £12,198,000
% of total assets* 2.8%
Valuation at
31 January 2025
£12,372,000
% of total assets
at 31 January 2025
2.6%
Net purchases/(sales)
in year to 31 January 2026
£530,000
Held since 2020
Valuation £11,812,000
% of total assets* 2.8%
Valuation at
31 January 2025
£11,906,000
% of total assets
at 31 January 2025
2.5%
Net purchases/(sales)
in year to 31 January 2026
(£1,946,000)
Held since 2015
Strategic report
32
Annual Report and Financial Statements 2026
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
SWCC
SWCC Showa is an electric wire/cable
manufacturer. Its traditional business
relates to the manufacture and supply of
low and high voltage cables for private
and public electric power utilities. It is in
the process of moving away from its low
growth and low margin legacy business,
of supplying cables, to becoming a
component supplier. It has developed
a set of unique, lightweight and high
margin connector components, branded
as SICONEX, that are driving strong profit
growth. The market continues to rate the
company as an undifferentiated supplier
of commoditised products, ignoring the
radical changes occurring within the
business, and as such the shares remain
very lowly rated. SWCC is classed as a
‘Proven Winner’.
Katitas
Katitas is a specialist real-estate developer
that buys and renovates old, abandoned
homes before selling them on to mainly first-
time buyers. The problem of empty houses
in Japan is reaching acute levels, resulting in
a hollowing out of entire communities. There
are an estimated 8million old or abandoned
houses across Japan, most of them vacant.
A lot of these are ancestral homes which
families, despite living elsewhere, are
reluctant to sell. For authorities looking to
regenerate local economies, the only option
is to demolish these properties and build new
establishments, often for business purposes.
The families are generally reluctant to give
up these properties for sentimental reasons.
Katitas offers an alternate and attractive
option for these families by offering to
acquire these houses and the associated
land for a reasonable price, renovate these
to a high standard before selling them.
Inthe process, Katitas also ends up playing
a part in rejuvenating local communities.
Because these houses are scattered all
across Japan, sourcing potential properties
is quite difficult. Over the years, Katitas has
developed a strong network of local contacts
across Japan that ensures a steady supply
of properties they could buy. The company
generates very attractive margins despite
selling these properties at a meaningful
discount to new builds. Finally, second-hand
home ownership in Japan is exceptionally
low compared to other developed markets
although this is changing and should provide
a long-term tailwind for Katitas. This is
classified as a ‘Proven Winner’.
Valuation £11,332,000
% of total assets* 2.6%
Valuation at
31 January 2025
£7,917,000
% of total assets
at 31 January 2025
1.7%
Net purchases/(sales)
in year to 31 January 2026
£2,617,000
Held since 2022
Valuation £10,652,000
% of total assets* 2.5%
Valuation at
31 January 2025
£12,625,000
% of total assets
at 31 January 2025
2.7%
Net purchases/(sales)
in year to 31 January 2026
(£1,450,000)
Held since 2022
Valuation £10,521,000
% of total assets* 2.4%
Valuation at
31 January 2025
£14,465,000
% of total assets
at 31 January 2025
3.1%
Net purchases/(sales)
in year to 31 January 2026
(£6,447,000)
Held since 2017
Kohoku Kogyo
Kohoku Kogyo manufactures electronic
components. Its two main products are
capacitor lead terminals and optical
components for subsea data cables.
Bothof these product niches are low cost
but mission critical, and the company
enjoys powerful leading positions globally
with 50%+ market share. The company’s
track record, vertical integration, and
cumulation of manufacturing knowhow
set it apart from competitors. We believe it
has excellent long term growth prospects
as it benefits from structural drivers such
as electrification and AI. Kohoku Kogyo is
considered to be a ‘Cyclical Gainer’.
33
Baillie Gifford Shin Nippon PLC
Gift
Gift holdings is one of Japan’s largest
ramen restaurants. It has a unique model
whereby it operates its own stores but also
supplies raw materials to a network of
franchisees with a very simple charging
structure. This significantly lowers the
barrier for franchisees to join Gift Holdings’
ecosystem thereby enabling the company
to expand rapidly at very low cost and high
margin. The company is run by its young
and dynamic founder who trained as a
ramen chef for several years before starting
the company without any external money.
Ramen is a staple food item in Japan and it
is one of the few categories that has grown
over the past decade despite demographic
headwinds. We see Gift as a ‘Rapid Scaler’.
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Harmonic Drive Systems
Harmonic Drive is a leading mechatronic
company. It is best known for its precision
motion control products such as harmonic
reducers, as used in industrial robots
and semiconductor manufacturing. Its
long history and consistent R&D helped
cement an excellent position in this
exciting market. Aside from continued
developments in established robotics
applications, Harmonic Drive also offers
exposure to the ‘Physical AI’ theme – for
example, we believe Harmonic Drive is
well placed to benefit from the growth of
humanoid robots. Harmonic Drive is viewed
as a ‘Rapid Scaler’.
Valuation £10,434,000
% of total assets* 2.4%
Valuation at
31 January 2025
£10,334,000
% of total assets
at 31 January 2025
2.2%
Net purchases/(sales)
in year to 31 January 2026
£52,000
Held since 2024
Valuation £10,177,000
% of total assets* 2.4%
Valuation at
31 January 2025
£11,033,000
% of total assets
at 31 January 2025
2.3%
Net purchases/(sales)
in year to 31 January 2026
£2,816,000
Held since 2012
Strategic report
34
Annual Report and Financial Statements 2026
Cover
Cover runs Hololive production, one of
the world’s leading agencies for Vtubers
(or ‘virtual Youtubers’) – these are content
creators who broadcast and interact with
fans online as animated characters, often
using motion capture technologies. Cover
recruits and trains talent, provides content
production and distribution support, and
makes money from events, merchandising
and licensing IP. As a pioneer in this
emerging field, Cover has a strong track
record in growth and innovation and
continues to be led by its founder Tanigo
Motoaki. The opportunity is particularly
exciting if Vtubing becomes mainstream
globally. Weconsider this a ‘Rapid Scaler.’
DMG Mori
DMG Mori is a leading machine-tool maker
formed from the combination of Japan’s
DMG Seiki and Germany’s Gildemeister,
selling high-precision CNC machines and
integrated automated production lines.
Factory automation is a key structural
driver. DMG is well positioned through
its deep technical capabilities, a global
support network, and an integrated product
approach which leads to long term customer
relationships. The company’s cost structure
suggests significant scope for profits to
grow as utilisation of DMG Mori’s capacity
improves; and the growing Aerospace &
Defence sector in Europe and Japan may
serve as a powerful catalyst for this to
materialise. This is a ‘Cyclical Gainer.’
JMDC
JMDC is a Japanese healthcare data
platform. It aggregates insurance claims
data, personal health records through its
Pep Up app, and hospital-derived datasets,
then sells anonymised data packages
and analytics to pharma companies,
insurers, and hospitals; it also runs a
smaller telemedicine workflow that lets
radiologists read scans remotely. As
healthcare becomes more digital and
more AI-enabled, access to high-quality,
longitudinal data becomes scarce and
strategically valuable. The company
benefits from classic data-network effects,
and the sensitivity of medical data makes
it hard for new entrants to compete.
After years of building its datasets, the
management’s emphasis is increasingly
shifting toward monetisation, and we
believe JMDC has very strong long-term
prospects. We categorise JMDC as a
‘Rapid Scaler.’
New buys
Valuation £3,129,000
% of total assets* 0.7%
Valuation £5,525,000
% of total assets* 1.3%
Valuation £2,334,000
% of total assets* 0.5%
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
©2020 Mariia Korneeva_Shutterstock
35
Baillie Gifford Shin Nippon PLC
Kasumigaseki Capital
Kasumigaseki Capital is a real estate
developer that focuses on niches such as
automated refrigerated warehouses, group
stay hotels and premium nursing homes
in Japan and beyond. The company has
shown a knack for spotting interesting
opportunities and developing properties
with innovative features. Furthermore,
Kasumigaseki employs an unusual asset
light business model where its own capital
is only deployed for the planning stage of a
project, leading to high asset turnover and
impressive returns. As a result, Kasumigaseki
Capital has achieved >100% annual profit
growth in recent years, and the ambitious
management continues to aim to recycle
capital aggressively to pursue further
expansion in the coming years by targeting
~50% net profit growth in the next few
years. Kasumigaseki Capital is categorised
as a ‘Rapid Scaler.’
Mani
Mani is a niche medical device
manufacturer that supplies precision tools
to surgeons and dentists: ophthalmic
knives for cataract surgery, specialist
suture needles, and dental restorative
materials. While the market may seem
unglamorous, this is an attractive business
as quality and reliability really matters;
and Mani enjoys excellent reputation in
these niches. The underlying market is
supported by Asia’s ageing population, as
well as the company’s proactive expansion
into the US. We see the company’s recent
management changes as an indicator of
ambition and expects to see Mani scale
profitably into their chosen segments
internationally. We classed Mani as a
‘Proven Winner.’
Valuation £9,001,000
% of total assets* 2.1%
Valuation £5,212,000
% of total assets* 1.2%
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Money Forward
Money Forward is a leading provider of
cloud-based software for Japan’s small
and mid-sized businesses, covering back-
office workflows such as accounting,
expense management, and payroll.
Alongside this, Money Forward also runs
the personal finance app Money Forward
ME. As Money Forward software forms
the system of record for its business
clients, few clients switch away once it is
embedded. This provides a predictable
income stream, as well as a platform to
connect clients to other services (such
as fintech). Money Forward is led by its
ambitious founder, and we are particularly
excited by its long-term prospects as
Japan’s smaller businesses digitalise from
a low base, and the company explores the
immense potential of AI within its product
offering. Money Forward is a ‘Rapid Scaler.’
Valuation £3,638,000
% of total assets* 0.8%
Strategic report
36
Annual Report and Financial Statements 2026
Seiko
Seiko has been making watches for over
100 years. Aside from having a globally
recognised brand backed by heritage and
technical innovation, Seiko stands out in
the Swiss dominated industry through its
vertical integration and unrivalled breadth
of credible offering across price tiers.
While the global watch market is shrinking
in volume terms, it continues to grow in
value terms as watches shift from utility
to personal expression and luxury. Seiko,
still led by the founding family, is set to
benefit from the premiumisation trend,
and we believe has a long growth runway
as it increasingly establishes itself at the
high end of the market through the Grand
Seiko and Credor brands. We see Seiko as
a ‘Proven Winner.’
Shinnihon
Shinnihon Corp is a mid-sized, family-
owned construction company and real
estate development company, focusing on
projects around the Tokyo metropolitan area.
The company’s construction business has
achieved decent growth and profitability in
recent years through solid execution, and it
has benefited from the tight labour supply
as demand for dependable subcontractors
such as Shinnihon rose. On the real estate
side, Shinnihon’s long-term orientated
management is ready to deploy its
balance sheet to build its land bank should
opportunities emerge and has also signalled
for a stronger focus on shareholder returns.
Shinnihon is a ‘Cyclical Gainer.’
Valuation £5,144,000
% of total assets* 1.2%
Valuation £1,113,000
% of total assets* 0.3%
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
37
Baillie Gifford Shin Nippon PLC
Performance
1 year
%
3 years
%
5 years
%
10 years
%
Share price 14.4 (13.7) (43.8) 53.0
NAV 5.4 (14.9) (36.1) 71.6
Comparative index* 21.5 40.7 42.4 138.8
All figures are stated on a total return basis
†
for the period to 31 January 2026.
*
Comparative index: MSCI Japan Small Cap Index (total return and in sterling terms).
†
Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 123.
Portfolio executive
summary
Contributors
Absolute
performance
% *
Tsugami 80.2
Raksul 36.2
Yonex 42.3
Horiba 73.6
Anicom 49.0
Detractors
Absolute
performance
% *
Inforich (62.2)
Appier Group (41.7)
Harmonic Drive Systems (30.8)
Peptidream (33.8)
GENDA (58.4)
Key contributors and detractors to performance – year to 31 January 2026
* Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026.
For the definition of total return see Glossary of terms and Alternative Performance Measures on pages 125 to 128. Table ordered by contribution
to performance.
Source: Revolution.
New buys
Cover
DMG Mori
JMDC
Kasumigaseki Capital
Mani
Money Forward
Seiko
Shinnihon
Complete sales
Avex Group
Cellsource
Demae-Can
Inter Action
Iriso Electronics
Jade Group
Kumiai Chemical
MatsukiyoCocokara
Moneytree
MonotaRO
oRo
Shima Seiki
SIIX
Technopro
Torex Semiconductor
Strategic report
38
Annual Report and Financial Statements 2026
>£5bn<£250m £250–500m £2–5bn£1–2bn£500m–1bn
● Shin Nippon ● MSCI Japan Small Cap Index (total return and in sterling terms)
% of portfolio and index stocks
0%
50%
40%
30%
10%
20%
Distribution of total assets
*
and size splits
Industry 2026
Listings 2026
3
4
5
2
1
Size splits (market capitalisation of investments)
As at 31 January 2026
4
5
2
3
6
7
8
9
10
10
1
Industry 2026
%
2025
%
1 Industrials 28.3 27. 1
2 Information technology 1 7. 9 19.2
3 Consumer discretionary 15.1 15.5
4 Communication services 9.4 9.6
5 Financials 8.7 9.1
6 Healthcare 7. 2 5.4
7 Consumer staples 3.7 5.5
8 Real estate 3.7 3.0
9 Materials 2.0 1.3
10 Net liquid assets 4.0 4.3
Listings 2026
%
2025
%
1 Tokyo Prime 6 7. 7 66.2
2 Tokyo Growth 14.3 16.1
3 Tokyo Standard 12.2 11.4
4 Private company 1.8 2.0
5 Net liquid assets 4.0 4.3
Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 123.
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128.
39
Baillie Gifford Shin Nippon PLC
Portfolio weightings
*
Relative to comparative index
Holding period
* Source: Baillie Gifford/Revolution and relevant underlying index providers. See disclaimer on page 123 and Glossary of terms and Alternative
Performance Measures on pages 125 to 128.
Difference (% points underweight/overweight)
Real Estate
Health Care
Energy
Materials
Consumer
Staples
Utilities
Consumer
Discretionary
Financials
Information
Technology
Communication
Services
Industrials
(10) (5) 0510
0102030
40
% of portfolio
<2 years
2–5 years
5–10 years
>10 years
Strategic report
40
Annual Report and Financial Statements 2026
We hold our private company investments at an
estimation of ‘fair value’, i.e. the price that would be
paid in an open-market transaction. Valuations are
adjusted both during regular valuation cycles and on
an ad hoc basis in response to ‘trigger events’. Our
valuation process ensures that private companies
are valued in both a fair and timely manner.
The valuation process is overseen by a valuations
group at Baillie Gifford, which takes advice from an
independent third party (S&P Global). The valuations
group is independent from the investment team, as
well as Baillie Gifford’s Private Companies Specialist
team, with all voting members being from different
operational areas of the firm, and the investment
managers only receive final valuation notifications
once they have been applied.
We revalue the private holdings on a three-
month rolling cycle, with one-third of the holdings
reassessed each month. During stable market
conditions, and assuming all else is equal, each
investment would be valued four times in a
twelve-month period. Regarding the Trust’s private
portfolio, the prices are also reviewed twice per
year by the respective boards and are subject
to the scrutiny of external auditors in the annual
auditprocess.
Beyond the regular cycle, the valuations group also
monitors the portfolio for certain `trigger events’.
These may include changes in fundamentals, a
takeover approach, an intention to carry out an
Initial Public Offering (`IPO’), company news which
is identified by the valuation team or by the portfolio
managers, or meaningful changes to the valuation of
comparable public companies. Any ad hoc change
to the fair valuation of any holding is implemented
swiftly and reflected in the next published net asset
value (‘NAV’). There is no delay.
The valuations team also monitors relevant
marketindices on a weekly basis and updates
valuations in a manner consistent with our external
valuer’s (S&P Global) most recent valuation report
where appropriate.
The valuation movements in the year have been
summarised below, pricing in the continued
challenging market backdrop, coupled with some
positive performance within the private portfolio.
Average
movement
in company
valuation
Average
movement
in price of
share class
held
Shin Nippon* 4 7. 2 % 39.1%
Baillie Gifford –
valuing private
companies
* Data reflecting period 1 February 2025 – 31 January 2026 to align with the Company’s reporting period end.
41
Baillie Gifford Shin Nippon PLC
Private companies summary
Historical snapshot
Since our first investment in private companies in 2017, Shin Nippon has deployed £20.14 million of capital
inthis area.
Portfolio activity – year to 31 January 2026
No new capital was deployed in private companies during the year. No private companies listed during the
year, however Moneytree was taken-over and is no longer held.
Private exposure
* (31 January 2026)
Gojo & Company 1.19% £5,112,000
Spiber
†
0.00% £0
JEPLAN 0.57% £2,459,000
*
Stated as a percentage of total assets as at 31 January 2026.
†
Spiber was written down to nil following confirmation that the existing entity would be liquidated, with all residual value used to repay creditors, leaving
no recoverable value for shareholders.
Company level valuation movements – year to 31 January 2026
Gojo & Company
Spiber
JEPLAN
Shin Nippon +47.2%
Average change at company level
Year to 31 January 2026
Valuation changes
-150%
-100%
-50%
0%
50%
100%
150%
200%
250%
Source: Baillie Gifford. This graph shows the change in valuation at company level for the year to 31 January 2026 in local currency.
Strategic report
42
Annual Report and Financial Statements 2026
Portfolio by
growth profile
as at 31 January 2026
The portfolio is structured by growth profile (as described in the Manager’s Report on pages 11 and 12) and
conviction level, which together guide position sizing.
Emerging Prospects
Earnings
Time
Rapid Scaler
Earnings
Time
Cyclical Gainers
Earnings
Time
Proven Winner
Earnings
Time
Strong
Gojo & Company Inc Ord 1.2%
SpiderPlus 0.7%
INFORICH 0.7%
JEPLAN 0.6%
Raksul 4.0%
GA Technologies 2.8%
Tsugami 4.1%
JEOL 3.3%
Kohoku Kogyo 2.6%
–
Solid
–
Gift 2.4%
Harmonic Drive Systems 2.4%
eGuarantee 1.9%
Appier Group 1.8%
Bengo4.com 1.8%
Infomart 1.5%
Global Security Experts 1.4%
Litalico 1.3%
Peptidream 1.3%
Kasumigaseki Capital 1.2%
Soracom 1.2%
GMO Financial Gate 1.1%
Cybozu 1.0%
Kamakura Shinsho 1.0%
Istyle 1.0%
Nifco 2.2%
KH Neochem 2.0%
Horiba 2.0%
Megachips 1.9%
Toyo Tanso 1.8%
Optex 1.8%
Nikkiso 1.5%
DMG Mori 1.3%
Shinnihon 1.2%
OSG 1.1%
Yonex 2.8%
SWCC 2.5%
Katitas 2.4%
Lifenet Insurance 2.2%
Vector 2.1%
Mani 2.1%
Base
Crowdworks 0.3%
Spiber 0.0%
Weathernews 0.8%
Oisix 0.8%
Money Forward 0.8%
GMO Payment Gateway 0.7%
JMDC 0.7%
Genda 0.6%
COVER 0.5%
Nittoku 0.9%
Nippon Ceramic 0.6%
Seria 1.9%
Cosmos Pharmaceuticals 1.9%
Kitz 1.7%
Sho-Bond 1.6%
Nakanishi 1.6%
Anicom 1.6%
Asahi Intecc 1.5%
Anest Iwata 1.1%
I-Ne 1.0%
Noritsu Koki 1.0%
Shoei 0.9%
Seiko 0.3%
Total assets* 3.5% 34.0% 28.3% 30.2%
* Net liquid assets represents 4% of total assets
Conviction levels
Conviction levels are determined by portfolio weight within each growth profile, reflecting our assessment of
upside potential, downside risk and the strength of the investment case:
Strong – holdings at the upper end of the position size ranges.
Solid – holdings with mid-range position sizes.
Base – holdings with smaller position sizes.
Conviction levels, and therefore position sizes, are reviewed on an ongoing basis and may change as share price
and fundamentals evolve.
43
Baillie Gifford Shin Nippon PLC
List of
investments
as at 31 January 2026
Name
Business
2026
Value
£’000
% of
total
assets
#
Absolute
†
performance
%
2025
Value
£’000
Tsugami Manufacturer of automated machine tools 17,774 4.1 80.2 10,224
Raksul Internet based services 17,333 4.0 36.2 11,479
JEOL Manufacturer of scientific equipment 14,042 3.3 (0.5) 12,617
GA Technologies Interactive media and services 12,198 2.8 (7.0) 12,372
Yonex Sporting goods 11,812 2.8 42.3 11,906
Kohoku Kogyo Manufacturer of undersea cable lead terminals 11,332 2.6 8.0 7,917
SWCC Electric wire and cable manufacturer 10,652 2.5 41.2 12,625
Katitas Real estate services 10,521 2.4 30.3 14,465
Gift Food industry operator and distributor 10,434 2.4 1.7 10,334
Harmonic Drive Systems Robotic components 10,177 2.4 (30.8) 11,033
Lifenet Insurance Online life insurance 9,605 2.2 (6.5) 14,347
Nifco Value-added plastic car parts 9,241 2.2 19.3 12,886
Mani* Manufactures medical goods and equipment 9,001 2.1 20.9 –
Vector PR Company 8,851 2.1 30.6 8,367
Horiba Manufacturer of measuring instruments 8,669 2.0 73.6 6,889
KH Neochem Chemical manufacturer 8,639 2.0 14.0 3,011
Megachips Electronic components 8,191 1.9 35.6 13,318
Cosmos Pharmaceuticals Drugstore chain 8,137 1.9 (12.6) 8,755
Seria Discount retailer
8,125 1.9 28.5 6,136
eGuarantee Guarantees trade receivables 7,993 1.9 (7.4) 4,683
Top 20 212,727 49.5
Toyo Tanso Electronics company 7,883 1.8 26.9 6,165
Appier Group Software as a service company providing
AIplatforms
7,826 1.8 (41.7) 11,679
Optex Infrared detection devices 7,677 1.8 35.2 6,622
Bengo4.com Online legal consultation 7,615 1.8 (5.3) 7,226
Kitz Industrial valve manufacturer 7,230 1.7 60.8 5,044
Anicom Pet insurance provider 6,987 1.6 49.0 7,395
Nakanishi Dental equipment 6,783 1.6 (21.6) 9,947
Sho-Bond Infrastructure reconstruction 6,712 1.6 3.8 7,560
*
Figures relate to part period returns where the investment has been purchased in the period.
#
See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
†
Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026.
Strategic report
44
Annual Report and Financial Statements 2026
Name
Business
2026
Value
£’000
% of
total
assets
#
Absolute
†
performance
%
2025
Value
£’000
Asahi Intecc Specialist medical equipment 6,548 1.5 (10.1) 4,501
Nikkiso Industrial pumps and medical equipment 6,426 1.5 62.6 4,716
Infomart Internet platform for restaurant supplies 6,352 1.5 2 7. 3 10,886
Global Security Experts Cyber Security Company 5,989 1.4 14.5 5,273
Litalico Provides employment support and learning support
services for people with disabilities
5,693 1.3 (1.7) 4,211
DMG Mori* Machine tool manufacturer 5,525 1.3 (21.9) –
Peptidream Drug discovery and development platform 5,490 1.3 (33.8) 9,907
Kasumigaseki Capital* Real estate developer and management services 5,212 1.2 (24.1) –
Shinnihon* Construction company and real estate developer 5,144 1.2 18.8 –
Soracom Networking software provider 5,128 1.2 (16.8) 2,185
Gojo & Company Inc Ord
Diversified financial services 5,112 1.2 (15.5) 6,050
Anest Iwata Manufactures compressors and painting machines 4,650 1.1 15.2 11,060
GMO Financial Gate Face-to-face payment terminals and
processingservices
4,612 1.1 (28.3) 7,140
OSG Manufactures machine tool equipment 4,504 1.1 43.2 4,148
Cybozu Develops and markets internet and intranet
application software for business
4,497 1.0 (20.5) 9,389
I-Ne Hair care range 4,303 1.0 (42.1) 6,991
Noritsu Koki Holding company with interests in biotech and
agricultural products
4,158 1.0 25.7 10,360
Istyle Beauty product review website 4,136 1.0 (21.5) 6,598
Kamakura Shinsho Information processing company 4,104 1.0 6.4 4,829
Nittoku Coil winding machine manufacturer 3,871 0.9 3.0 7,119
Shoei Manufactures motor cycle helmets 3,774 0.9 (23.2) 7,463
Money Forward* Accounting and back office software company 3,638 0.8 (17.8) –
Weathernews Weather information services 3,323 0.8 6.6 3,057
Oisix Organic food website 3,313 0.8 (12.4) 5,987
GMO Payment Gateway Online payment processing 3,174 0.7 (0.1) 3,351
INFORICH Software Company 3,167 0.7 (62.2) 9,831
JMDC* Medical statistics data services 3,129 0.7 (21.6) –
SpiderPlus Construction project management platform 2,872 0.7 (31.0) 4,263
Genda Operates as a holding company for
entertainmentbusinesses
2,699 0.6 (58.4) 659
Nippon Ceramic Electronic component manufacturer 2,490 0.6 46.0 1,181
JEPLAN
Chemical PET recycling 2,459 0.6 194.9 834
COVER* An entertainment agency that manages content
creators known as Vtubers (‘virtual Youtubers’)
2,334 0.5 (42.3) –
Crowdworks Crowd sourcing services 1,225 0.3 (44.6) 3,597
Seiko* Vertically integrated manufacturer of watches, and
various electronic devices
1,113 0.3 6.3 –
Spiber
Textiles – – (100.0) 1,030
Private company (unlisted) investment.
* Figures relate to part period returns where the investment has been purchased in the period.
# See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
† Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026.
45
Baillie Gifford Shin Nippon PLC
2026
Value
£’000
% of
total
assets
#
Absolute
†
performance
%
2025
Value
£’000
Total investments 411,604 96.0
Net liquid assets
#
17,324 4.0
Total assets
#
428,928 100.0
Bank loans (70,105) (16.3)
Shareholders’ funds 358,823 83.7
Source: Baillie Gifford/Revolution and relevant underlying index data providers. See disclaimer on page 123.
#
See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
† Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026.
Listed equities
%
Private company
investments
%
Net liquid
assets
†
%
Total
assets
†
%
31 January 2026 94.2 1.8 4.0 100.0
31 January 2025 93.8 1.9 4.3 100.0
†
See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
Strategic report
46
Annual Report and Financial Statements 2026
Past performance is not a guide to future performance.
Business model
Business and status
Baillie Gifford Shin Nippon PLC (‘the Company’)
is a public company limited by shares and is
incorporated in Scotland. The Company is an
investment company within the meaning of section
833 of the Companies Act 2006 and carries on
business as an investment trust. Investment trusts
are UK public listed companies and their shares are
traded on the London Stock Exchange. They invest
in a portfolio of assets in order to spread risk. The
Company has a fixed share capital although, subject
to shareholder approval sought annually, it may
purchase its own shares or issue shares. The price
ofshares is determined, like other quoted shares,
bysupply and demand.
The Company has been approved as an investment
trust by HM Revenue & Customs subject to the
Company continuing to meet the eligibility conditions.
The Directors are of the opinion that the Company
has continued to conduct its affairs so as to enable
itto comply with the ongoing requirements of
section 1158 of the Corporation Tax Act 2010 and
the Investment Trust (Approved Company) Tax
Regulations 2011.
The Company is an Alternative Investment Fund (‘AIF’)
for the purposes of the UK Alternative Investment
Fund Managers Regulations.
Change to Investment Policy
Anon-material change to the Investment Policy was
approved by the Board on 2 April 2025. Previously
the policy restricted investee companies to those
with a market capitalisation or turnover of less than
¥150bn at time of initial purchase. This limit had
been restricting new purchases to companies that
are now in approximately the bottom 20% of the
MSCI Japan Small Cap Index in terms of market
cap. The Board has replaced the fixed limit with
a relative restriction based on the composition of
the MSCI Japan Small Cap Index at any given time.
TheInvestment Policy is set out below.
Objective and policy
Baillie Gifford Shin Nippon’s objective is to pursue
long term capital growth through investment
principally in small Japanese companies which are
believed to have above average prospects for growth.
The Company will invest primarily in companies that,
at the time of initial investment, are constituents
of the MSCI Japan Small Cap Index (the “Index”).
However, the Company would typically expect
to invest in ‘small’ companies that have market
capitalisations at or below the average market
capitalisation of the companies within the Index at the
time of initial investment.
The portfolio is constructed through the identification
of individual companies which offer long term growth
potential, typically over a five year horizon. The
portfolio is actively managed and does not seek
to track the comparative index, hence a degree of
volatility against the index is inevitable.
Business review
47
Baillie Gifford Shin Nippon PLC
In constructing the equity portfolio a spread of risk
is achieved by diversifying the portfolio through
investment in 40 to 80 companies. Although sector
concentration and the thematic characteristics of
the portfolio are carefully monitored, there are no
maximum limits to deviation from comparative index
stock or sector weights.
Exposure to any single company is limited to 5% of
the Company’s total assets, measured at the time of
investment. Exposure to a single company that, as a
result of performance, exceeds 5% of the Company’s
total assets is subject to particular scrutiny but may
be maintained at a level in excess of 5% where the
Managers are convinced of the ongoing merits of the
investment case.
The Company may invest in UK and Overseas
domiciled collective investment schemes, including
UK listed investment trusts, that invest principally in
Japanese securities. On acquisition, no more than
15% of the Company’s total assets will be invested in
such companies or funds.
The portfolio is expected to consist of predominantly
quoted equity holdings, however unlisted investments
may also be held. Unlisted investments shall not
exceed 10% of the total assets of the Company in
aggregate, measured at the time of investment.
From time to time, fixed interest instruments,
or non-equity investments, may be held on an
opportunistic basis. The Company may use derivatives
which will be principally, but not exclusively, for the
purpose of efficient portfolio management (i.e. for
the purpose of reducing, transferring or eliminating
investment risk in its investments, including protection
against currencyrisks).
The Company recognises the long-term advantages
of gearing. Although the Company may have
maximum equity gearing of 50% of shareholders’
funds, the Board would seek to have a maximum
equity gearing level of 30% of shareholders’ funds
atthe time of drawdown.
Borrowings
Borrowings are typically invested in securities when
it is considered that investment grounds merit the
Company taking a geared position to securities.
Gearing levels, and the extent of equity gearing,
are discussed by the Board and Managers at every
Board meeting. The Managers are tasked with
ensuring that gearing is managed efficiently and
within the parameters set by the Board and any loan
covenants.
Facility
amount
Facility
type Lender Maturing Drawings
¥16,100
million
Secured
revolving
credit
Bank of
America, N.A.
7 November
2027
Y14,840
million
drawn
During the year, the existing Y2bn and Y7bn
revolving credit facilities with ING were cancelled
and incorporated into the cheaper secured revolving
credit facility with Bank of America (extended to
Y16.1bn).
The main covenants relating to the loans are
that borrowings should not exceed 35% of the
Company’s adjusted net asset value. During the
year, Bank of America removed the loan covenant
that required the Company’s net asset value to be
at least £225 million. There were no breaches in the
loan covenants during the year.
Strategic report
48
Annual Report and Financial Statements 2026
The Board also has regard to the total return of the
Company’s principal comparative index (MSCI Japan
Small Cap Index (total return and in sterling terms))
and considers the performance of comparable
companies. Across these measures, the Board looks
for relative outperformance over the long term, while
remaining mindful that the nature of the investment
policy and the growth characteristics of the portfolio
investments may entail periods of underperformance
over the short and medium term. The Board received
shareholder approval in February 2026 to bring
forward the 15% tender offer planned for 2027 to Q1
2026, introduce a 100% performance related tender
in 2030 and hold a continuation vote in 2028. The
15% tender offer was oversubscribed and completed
on 19 March 2026. Discussion on thecurrent year’s
performance is included in the Chair’s statement on
pages 7 to 9. The one, five and ten year records of
the KPIs are shown on pages 24 to 29.
Key performance indicators
The Board uses key performance indicators (KPIs) to measure the progress and performance of the
Company over time when discharging its duties as set out on page 64. These KPIs are established industry
measures and an explanation of how they are calculated can be found in the Glossary of terms and
Alternative Performance Measures (‘APM’) onpages 125 to 128. The performance measures below are to
31January 2026.
Share price and net asset valuetotal returns
(APM)
The total return is the return to shareholders after
reinvesting anynet dividend on the date that
theshare price goes ex-dividend.
%
-50
-25
0
25
50
75
100
● NAV total
return
● Share price
total return
1 year 5 years 10 years
Share price discount/premium (APM)
As stock markets and share prices vary, an
investment trust’s share price is rarely the same as
its NAV. When the share price is lower than the NAV
per share it is said to be trading at a discount. If the
share price is higher than the NAV per share, this
situation is called a premium.
%
● Average discount/premium
of NAV to share price
1 year 5 years 10 years
-30
-20
-10
0
10
Ongoing charges (APM)
Ongoing charges are the total recurring expenses
(excluding the Company’s cost of dealing in
investments and borrowing costs) incurred by the
Company as a percentage of the daily average net
asset value.
0.4
0.6
0.8
1.0
1.2
● Ongoing charges movement
2016
%
20262020 20222018 2024
49
Baillie Gifford Shin Nippon PLC
Principal and emerging risks
As explained on pages 72 and 73, there is an ongoing process for identifying, evaluating and managing
the risks faced by the Company. The Directors have carried out a robust assessment of the principal
and emerging risks facing the Company, including those that would threaten its business model, future
performance, regulatory compliance, solvency or liquidity.
In light of the forthcoming requirements of Provision 29 of the revised UK Corporate Governance Code (and
Provision 34 of the AIC Code), the Board has undertaken a review of the Company’s risk framework during
the year. This review has focused on identifying the Company’s material risks, being those risks which could
have the most significant impact on the Company’s ability to achieve its investment objective and continue
in operation.
As a result, the Board has rationalised and consolidated its risk disclosures into a smaller number of clearly
defined material risks. This consolidation reflects the interrelated nature of a number of previously disclosed
risks, particularly where macroeconomic and geopolitical factors act as amplifiers of underlying investment
risks, rather than representing standalone risks.
The Board considers that the following represent the Company’s material risks. These will form the basis for
the Board’s future assessment of the effectiveness of the Company’s material controls.
Financial risk
What is the risk?
The Company’s assets consist mainly of
listed securities (98% of the investment
portfolio) and its principal financial risks
are therefore market related. These include
market risk (comprising currency risk,
interest rate risk and other price risk),
liquidity risk and credit risk.
The Company’s investment strategy,
including its focus on smaller companies,
may result in increased volatility and
periods of underperformance relative
to the comparative index. Smaller
companies are typically more sensitive
to market sentiment and macroeconomic
shocks. Macroeconomic and geopolitical
developments, including heightened global
instability, as well as climate-related factors
such as the physical impacts of climate
change and the transition to a lower-carbon
economy, may exacerbate these risks.
The Company also has exposure to private
company investments, which may be more
difficult to value and realise. During the
year, Moneytree was taken over and Spiber
was written down to zero, reducing the
Company’s ongoing exposure to private
company investments.
How is it managed?
The Board considers at each meeting various
portfolio metrics including individual stock
performance and weightings, the top and
bottom contributors to performance and
relative sector weightings against the
comparative index. The portfolio managers
provide rationale for stock selection decisions
and portfolio positioning.
The Board undertook a comprehensive review
of the Company’s investment strategy in
November 2024, following which a number of
changes were implemented, including the
appointment of a new lead portfolio manager
and deputy portfolio manager and refinements
to portfolio construction. The Board continues
to monitor the effectiveness of these changes
closely.
The Board has also taken steps to address
shareholder concerns and performance-
related outcomes, including the introduction
of a tender offer in 2026, a continuation vote
in 2028 and a performance-triggered tender
offer in 2030.
The Board considers the impact of currency
movements, particularly in relation to yen/
sterling exchange rates, and the interaction
between portfolio assets and yen-
denominated borrowings.
Private company investment risk is mitigated
through limits on exposure, frequent
independent valuation processes and detailed
Board review. The Company’s investment
policy limits exposure to private companies to
10% of total assets at the time of investment.
Rating and
change
Current assessment of risk
Risk level: High
This risk remains high given
continued market volatility,
ongoing macroeconomic and
geopolitical uncertainty and the
sensitivity of smaller companies
to these conditions.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
Strategic report
50
Annual Report and Financial Statements 2026
Discount risk
What is the risk?
The discount at which the Company’s
shares trade relative to its net asset value
can change. A widening discount may
undermine investor confidence and result
in shareholders receiving less than the
underlying net asset value when selling
their shares.
There is also an increased risk of activist
shareholder activity within the investment
trust sector, which may seek to influence
strategy, capital allocation or corporate
structure. Such activity may increase
share price volatility, create uncertainty
for shareholders and divert the Board’s
time and focus away from the oversight
of the Company’s long-term investment
strategy and performance.
How is it managed?
To manage this risk, the Board monitors
the level of discount/premium at which
the shares trade, movements in the share
register and investor sentiment towards the
Company and the wider investment trust
sector.
The Board has authority to buy back
shares where considered to be in the best
interests of shareholders. Over the year to
31 January 2026, the Company bought back
approximately 34.2 million shares (2025 –
30.3 million), which are held in treasury.
The Board has also implemented measures
to provide shareholder liquidity and address
discount-related concerns, including the
15% tender offer completed in March 2026.
The Board continues to engage actively with
shareholders and to consider appropriate
measures to address any sustained discount.
Rating and
change
Current assessment of risk
Risk level: Moderate
This risk is considered to be
reducing. The Company’s
discount decreased from
14.6% to 7.5% over the year
to 31 January 2026, reflecting
improved market conditions
and the positive impact of share
buybacks and other measures
implemented by the Board.
While the risk of discount
volatility remains, the actions
taken during the year have
strengthened the Company’s
position in managing this risk.
Regulatory risk
What is the risk?
Failure to comply with applicable legal and
regulatory requirements such as the tax
rules for investment trust companies, the
FCA Listing Rules and the Companies Act
could lead to suspension of the
Company’s Stock Exchange listing,
financial penalties or loss of investment
trust status.
How is it managed?
Baillie Gifford’s Business Risk, Internal
Audit and Compliance departments provide
regular reports to the Audit Committee on
monitoring programmes and regulatory
compliance.
Shareholder documents and announcements,
including the Annual and Interim Reports,
are subject to robust internal review
processes to ensure compliance with relevant
regulations. Procedures are also in place
to ensure adherence to the Market Abuse
Regulation and Disclosure Guidance and
TransparencyRules.
Where appropriate, representations are
made in respect of regulatory developments
to ensure that the interests of investment
trusts are recognised.
Rating and
change
Current assessment of risk
Risk level: Low
This risk is considered to
be unchanged. All control
procedures continue to operate
effectively.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
51
Baillie Gifford Shin Nippon PLC
Third party service provider risk
What is the risk?
The Company relies on third party service
providers, including the Managers,
depositary, custodian and registrar, for the
provision of key operational,
administrative and safeguarding functions.
Failure of these providers’ systems or
controls could lead to an inability to
provide accurate reporting and
monitoring, or result in loss or
misappropriation of assets.
Custody of the Company’s assets may be
compromised through control failures at
the depositary, custodian or registrar.
How is it managed?
The Board has delegated the design,
implementation and operation of internal
controls to the Managers and Secretaries but
retains overall responsibility for oversight.
Baillie Gifford & Co conducts an annual
review of its system of internal controls,
documented in an ISAE 3402 report which
is independently reviewed by its auditor. This
report is reviewed by Baillie Gifford’s Business
Risk Department, with a summary of key
findings reported to the Audit Committee.
The Audit Committee also has access to the
full report and the opportunity to review and
challenge its contents.
The custodian, depositary and registrar provide
regular reports on their control environments,
including the safekeeping of assets and
maintenance of shareholder records, and
independently audited internal controls
reports. These are reviewed by Baillie Gifford’s
Business Risk Department and reported to the
Audit Committee, with any issues investigated.
The Company’s assets are subject to
independent reconciliation and verification
procedures, including confirmation of holdings
with the custodian and investee companies,
and are also subject to annual external audit.
The Board considers the resilience and
performance of all key service providers on
an ongoing basis and believes that alternative
providers could be engaged if required.
Rating and
change
Current assessment of risk
Risk level: Low
This risk is considered to be
unchanged and all control
procedures are operating
effectively.
Cyber securityrisk
What is the risk?
A cyber attack on the systems of Baillie
Gifford or the Company’s third party
service providers could compromise the
confidentiality, integrity or availability of
data and systems, potentially resulting in
operational disruption, financial loss or
reputational damage.
The evolving nature of cyber threats,
including increased sophistication of
attacks and the emergence of new
technologies such as artificial intelligence,
may increase the likelihood and potential
impact of cyber incidents. In addition,
the continued use of hybrid working
arrangements may increase exposure to
cyber risks.
How is it managed?
The Audit Committee receives regular
reporting from Baillie Gifford’s Business
Risk Department on the effectiveness of
information security controls and the broader
cyber security framework.
Cyber security due diligence is performed on
key third party service providers, including
assessment of their information security
controls, crisis management procedures and
business continuity arrangements.
Baillie Gifford maintains comprehensive
business continuity and disaster recovery
plans which are designed to ensure the
continued operation of systems and
processes in the event of a disruption or
cyber incident.
Rating and
change
Current assessment of risk
Risk level: Moderate
This risk is considered to be
increasing due to the evolving
threat landscape, heightened
geopolitical tensions and the
increasing sophistication of
cyber threats.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
Strategic report
52
Annual Report and Financial Statements 2026
Leverage risk
What is the risk?
The Company may borrow money for
investment purposes. If the value of
investments falls, any borrowings will
magnify the impact of these losses. There
is also a risk that borrowing facilities
may not be renewed or that covenant
requirements may not be met, requiring
the Company to sell investments to
repayborrowings.
How is it managed?
All borrowings require prior approval of the
Board and gearing levels are discussed at
each Board meeting. Compliance with loan
covenants is monitored regularly.
Details of the Company’s borrowing facilities
are set out in note 11 to the Financial
Statements. The Company’s revolving credit
facility with Bank of America matures in
November 2027 and provides flexibility in
managing gearing levels.
The majority of the Company’s investments
are in quoted securities which are readily
realisable and could be sold to repay
borrowings if required.
Gearing levels reduced during the year
from 16% to 15%, reflecting a reduction in
borrowings and active management of the
balance sheet.
Further information on leverage is provided
on page 120 and in the Glossary of terms
and Alternative Performance Measures on
pages125 to 128.
Rating and
change
Current assessment of risk
Risk level: Moderate
This risk is considered to
bestable.
Emerging risk
The Board also considers emerging risks, being those that may not have an immediate impact but could arise over the longer term. The
Board considers that the key emerging risks arise from the interconnectedness of global economies and the related exposure of the
investment portfolio to external and emerging threats such as the societal and financial implications of escalating geopolitical tensions,
cyber security risks including developing AI capabilities, and potential future public health threats.
The Board monitors these risks on an ongoing basis and considers their potential impact within the context of the material risks
outlinedabove.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
53
Baillie Gifford Shin Nippon PLC
Viability statement
Notwithstanding the continuation vote to be held at
the Company’s Annual General Meeting in 2028 and
the potential for a performance-triggered tender offer
for up to 100% of the Company’s issued share capital
to be implemented, subject to shareholder approval,
around the time of the Company’s Annual General
Meeting in 2030, the Directors have, in accordance
with provision 31 of the UK Corporate Governance
Code, assessed the prospects of the Company over
a period of five years. The Directors continue to
believe this period to be appropriate as it reflects the
Company’s longer term investment strategy and to be
a period during which, in the absence of any adverse
change to the regulatory environment and to the tax
treatment afforded to UK investment trusts, they do
not expect there to be any significant change to the
current principal risks facing the Company nor to the
effectiveness of the controls employed to mitigate
those risks. In making this assessment, the Directors
have taken into account the potential impact of the
continuation vote and the performance-triggered
tender offer. Should the continuation vote not be
passed, the Directors would be required to bring
forward proposals for the future of the Company for
shareholder approval. Similarly, the tender offer would
only be implemented if the relevant performance
conditions are met and would be subject to shareholder
approval. In either case, the Company’s investment
portfolio is comprised predominantly of quoted
securities which are readily realisable and the Directors
believe that the Company would be able to meet
its liabilities as they fall due in such circumstances.
The Directors therefore continue to believe that the
prospects for Japanese small companies remain
positive over the long term and that the Company
remains viable over the assessment period.
In considering the viability of the Company, the
Directors have conducted a robust assessment of each
of the principal and emerging risks and uncertainties
detailed on pages 49 to 52 and in particular the impact
of market risk where a significant fall in Japanese
small equities markets would adversely impact the
value of the investment portfolio. The Directors have
also considered the Company’s leverage and liquidity
in the context of the secured bank loan with Bank
of America which expires on 7 November 2027 (see
note 11 on page 103). Although the Directors do not
envisage difficulty with refinancing the bank loan,
the majority of the investments are quoted securities
which are readily realisable and could be sold to repay
borrowings if required. Similarly, investments can
be realised to meet expenses to the extent that they
exceed portfolioincome.
Gearing levels and compliance with loan covenants are
reviewed by the Board on a regular basis.
Specific leverage and liquidity stress testing was
conducted during the year. Stress tests are applied
to the portfolio to identify the commitment leverage
of the Company in two scenarios: (i) gross assets
reduce by 25%; and (ii) gross assets reduce by
50%. Stress tests are also performed to determine
the impact on revenue earnings per share as a result
of an increase and decrease in projected portfolio
income of 25%. These stress tests are designed to
assess the resilience of the Company’s balance sheet,
liquidity and income under adverse market conditions.
Consideration is also given to the risk of further market
deterioration and no matters of concern were noted.
The Directors have also considered the oversubscribed
15% tender offer that completed on 19 March, the
potential impact of the continuation vote in 2028 and
the performance-triggered tender offer referred to
above. Given the liquidity of the Company’s portfolio
and the absence of any structural impediments to the
realisation of investments, the Directors believe that
the Company would be able to meet its liabilities as
they fall due in the event that either mechanism were
to result in a realisation of part or all of the portfolio.
In addition, all of the key operations required by
the Company are outsourced to third party service
providers and it is reasonably considered that
alternative providers could be engaged at relatively
short notice.
Based on the Company’s processes for monitoring
revenue projections, share price premium/discount,
the Managers’ compliance with the investment
objective, asset allocation, the portfolio risk profile,
leverage, counterparty exposure, liquidity risk and
financial controls, the Directors have concluded that
there is a reasonable expectation that the Company
will be able to continue in operation and meet its
liabilities as they fall due over the next five years.
Going Concern is reported on in the Corporate
Governance report on page 73.
Promoting the success of the Company
(section 172 statement)
Under section 172 of the Companies Act 2006, the
directors of a company must act in the way they
consider, in good faith, would be most likely to
promote the success of the company for the benefit of
its members as a whole, and in doing so have regard
(amongst other matters and to the extent applicable)
to: a) the likely consequences of any decision in
the long term, b) the interests of the company’s
employees, c) the need to foster the company’s
Strategic report
54
Annual Report and Financial Statements 2026
business relationships with suppliers, customers and others, d) the impact of the company’s operations on the
community and the environment, e) the desirability of the company maintaining a reputation for high standards
of business conduct, and f) the need to act fairly as between members of the company.
In this context and having regard to Baillie Gifford Shin Nippon being an externally-managed investment
company with no employees, the Board considers that the Company’s key stakeholders are its existing
and potential new shareholders, its externally-appointed Managers (Baillie Gifford) and other professional
service providers (corporate broker, registrar, auditor and depositary), lenders, portfolio companies, wider
society and the environment.
The Board considers that the interests of the Company’s key stakeholders are aligned, in terms of wishing
to see the Company deliver sustainable long-term growth, in line with the Company’s stated objective and
strategy, and meet the highest standards of legal, regulatory, and commercial conduct, with the differences
between stakeholders being merely a matter of emphasis on those elements.
The Board’s methods for assessing the Company’s progress in the context of its stakeholders’ interests are
set out on the following pages.
Stakeholder Why we engage How we engage and what we do
Shareholders Shareholders are, collectively, the Company’s
owners: providing them with a return for their
investment in accordance with the Company’s
investment policy and objective is the reason
for its existence.
The Board places great importance on communication
with shareholders. The Annual General Meeting provides
an opportunity for the Board and Managers to present to
shareholders on the Company’s performance, future plans
and prospects. It also allows shareholders the opportunity to
meet with the Board and Managers and raise questions and
concerns. The Chair is available to meet with shareholders as
appropriate. The Managers meet regularly with shareholders
and their representatives, reporting their views back
to the Board. Directors also attend certain shareholder
presentations, in order to gauge shareholder sentiment first
hand. Shareholders may also communicate with members of
the Board at any time by writing to them at the Company’s
registered office or to the Company’s broker. These
communication opportunities help inform the Board when
considering how best to promote the success of the Company
for the benefit of all shareholders over the long term.
Baillie Gifford –
Managers and
Secretaries
The Company’s Board has delegated the
management of the Company’s portfolio,
and the administration of the Company’s
operations including fulfilment of regulatory
and taxation reporting requirements, to
BaillieGifford. Baillie Gifford is therefore
responsible for the substantial activities of
the Company and has the most immediate
influence on its conduct towards the other
stakeholders, subject to the oversight and
strategic direction provided by the Board.
The Board seeks to engage with its Managers, and other
service providers, in a collaborative and collegiate manner,
encouraging open and constructive discussion and debate,
while also ensuring that appropriate and regular challenge
is brought and evaluation conducted. This approach aims to
enhance service levels and strengthen relationships with the
Company’s providers, with a view to ensuring the interests of
the Company’s shareholders are best served by keeping cost
levels proportionate and competitive, and by maintaining the
highest standards of business conduct.
Portfolio companies As all of the Company’s operations are
conducted by third party professional
providers, it is the companies held in its
investment portfolio which have the primary
real-world impact in terms of social and
environmental change, both positively and
negatively, as well as generating, through their
commercial success, the investment growth
sought by the Company’s shareholders.
The investee companies have an interest in
understanding their shareholders’ investment
rationale in order to assure themselves
that long-term business strategies will
besupported.
The Board is cognisant of the need to consider the impact of
the Company’s investment strategy and policy on wider society
and the environment. The Board considers that its oversight
of environmental, social and governance (‘ESG’) matters is
an important part of its responsibility to all stakeholders. The
Board’s review of the Managers includes an assessment of
their ESG approach and its application in making investment
decisions. The Board regularly reviews Governance
Engagement reports, which document the Managers’
interactions with investee companies on ESG matters (see
pages 18 to 22).
55
Baillie Gifford Shin Nippon PLC
Stakeholder Why we engage How we engage and what we do
Broker The Company’s broker provides an interface
between the Company’s Board and its
institutional shareholders.
The Company’s broker regularly attends Board meetings, and
provides reports to those meetings, in order to keep the Board
apprised of shareholder and wider market sentiment regarding
the Company. They also arrange forums for shareholders to
meet the Chair, or other Directors, outwith the normal general
meeting cycle.
Registrar The Company’s registrar provides an
interfacewith those shareholders who
holdthe Company’s shares directly.
The Company Secretaries liaise with the registrar to ensure the
frequency and accuracy of communications to shareholders
is appropriate, and monitor shareholder correspondence to
ensure that the level of service provided by the registrar is
acceptable. The Manager’s risk function reviews the registrars’
internal controls report and reports on the outcome of this
review to the Audit Committee.
Auditor The Company’s Auditor has a responsibility to
provide an opinion on whether the Company’s
financial statements as a whole are free
from material misstatement, as set out in the
Auditor’s report to the Members on pages 85
to 91.
The Company’s Auditor meets with the Audit Chair and
the Board, in the absence of the Managers where deemed
necessary, and the Managers undertake to provide all
information requested by the Auditor in connection with the
Company’s annual audit promptly and to ensure that it is
complete and accurate in all respects.
Depositary
andcustodian
The depositary is responsible for the
safekeeping of the Company’s financial
instruments, as set out in more detail on
page64.
The depositary provides the Audit Committee with a report on
its monitoring activities. The Board and Managers seek to
engage with the depositary and custodian in a collaborative and
collegiate manner, encouraging open and constructive
discussion and debate, while also ensuring that appropriate and
regular challenge is brought and evaluation conducted. This
approach aims to enhance service levels and strengthen
relationships with the Company’s providers, with a view to
ensuring the interests of the Company’s shareholders are best
served by keeping cost levels proportionate and competitive,
and by maintaining the highest standards of business conduct.
Lenders Lenders such as holders of debt instruments
(debentures, bonds and private placement loan
notes) and banks providing fixed or revolving
credit facilities provide the Company’s gearing
as described on page 47 and have an interest
inthe Company’s ongoing financial health
andviability.
The Company’s legal advisers review all legal agreements in
connection with the Company’s debt arrangements and advise
the Board on the appropriateness of the terms and covenants
therein. The Managers and Secretaries ensure that the
frequency and accuracy of reporting on, for example, covenant
certification, is appropriate and that correspondence from the
lenders receives a prompt response.
AIC/industry peers The Association of Investment Companies
(‘AIC’) and the Company’s investment
trust industry peers have an interest in
the Company’s conduct and performance,
asadverse market sentiment towards
oneinvestment trust can affect attitudes
towards the wider industry.
The Company is a member of the AIC, and the Directors and/
orthe Managers and Secretaries (as appropriate) participate
in technical reviews, requests for feedback on proposed
legislation or regulatory developments, corporate governance
discussions and/or training.
Investment platforms Investment platforms provide an interface
withshareholders who invest in the
Companyindirectly.
The Managers liaise with the various investment platforms on
strategies for improving communications with the Company’s
shareholders who hold their shares via these platforms. An
annual timetable of key dates is published on the Company’s
website, for the ease of reference of such shareholders.
Wider society and the
environment
No entity, corporate or otherwise, can exist
without having an influence on the society
inwhich it operates or utilising the planet’s
resources. Through its third-party relationships,
as noted above, the Company seeks to be
apositive influence and, in circumstances
where that is not possible, to mitigate its
negative impacts insofar as is possible.
The Board and Managers’ interactions with the various
stakeholders as noted above form the principal forms of
direct engagement with wider society and in respect of the
environment (commercial, financial, and in terms of planetary
health and resources).
Strategic report
56
Annual Report and Financial Statements 2026
The Board recognises the importance of keeping theinterests of the Company and its stakeholders, inaggregate,
firmly front of mind in its key decision making. The Company Secretaries are available at all times to the Board to
ensure that suitable consideration is given to the range of factors to which the Directors should have regard. In
addition to ensuring that the Company’s stated investment objective was being pursued, key decisions and
actions during the year which required the Directors to have regard to applicable section 172 factors included:
Key decision Action
Change to
Investment Policy
A change to the Investment Policy was approved by the Board on 2 April 2025 to broaden the market cap of
small companies permitted for investment with the aim of enhancing future returns to shareholders.
Share Buybacks The buying back of 34.2 million of the Company’s own shares into treasury at a discount to net asset value, for
subsequent reissue, in order to ensure the Company’s shareholders found liquidity for their shares when natural
market demand was insufficient, and on terms that enhance net asset value for remaining shareholders.
Increase to
Distributable
Reserves
At the Annual General Meeting on 20 May 2025 shareholders approved the reduction of the share premium account
and creation of an equivalent distributable reserve. This has provided a significant pool of reserves which can be
used in future to fund distributions including dividends, and any returns of capital, including tender offers and share
buybacks.
Tender Offer and
other proposals
Committing to undertake a tender offer for up to 15 per cent of the issued share capital in 2026 (replacing the
performance triggered tender offer that had been planned for 2027). Proposing a one-off continuation vote to
be held at the annual general meeting of the Company to be held in 2028 and the proposal to introduce a 2030
performance related tender offer for up to 100 per cent of the issued share capital.
Reduction in
Management Fee
Agreeing a reduction in the management fee with Baillie Gifford & Co Limited such that the fee is 0.65% on the first
£250 million of net assets and 0.55% thereafter per annum, with effect from 1 February 2026 (see page 99).
Shareholder
Meetings
Engaging with 43% of shareholders during the year to understand their priorities and concerns, with the feedback
received informing several of the major decisions outlined in this statement. Maintaining open, regular and
constructive dialogue with shareholders, which the Board considers central to its stewardship responsibilities.
Borrowings Arranging a three year ¥16,100 million secured revolving credit facility with Bank of America, N.A. to refinance
the ING Bank N.V. facilities expiring in March 2026 and November 2026 for the purpose of investing in exciting
Japanese small cap opportunities, which the Board believes will enhance long term returns for shareholders while
delivering finance cost savings over the period.
Dividend The recommendation of a final dividend of 0.69p pershare, being broadly the minimum required to maintain the
Company’s investment trust status.
Employees, human rights and
community issues
The Board recognises the requirement to provide
information about employees, human rights and
community issues. The Company has no employees.
All its Directors are non-executive and all its functions
are outsourced. There are therefore, no disclosures
to be made in respect of employees, human rights
and community issues. Further information on the
Company’s approach to environmental, social and
governance (‘ESG’) matters are provided below.
Board representation
At 31 January 2026 the Board comprises five
Directors, three male and two female. The Company
has no employees. The Board’s policy and disclosures
on diversity are set out on pages 70 and71.
Environmental, social and governance policy
Details of the Company’s policy on socially responsible
investment can be found under ‘Corporate governance
and stewardship’ on page 74 and the Managers’
approach to stewardship and examples of portfolio
company engagement are set out on pages 18 to 22.
The Company considers that it does not fall within
the scope of the Modern Slavery Act 2015 and it
isnot, therefore, obliged to make a slavery and
human trafficking statement. In any event, the
Company considers its supply chains to be of low
risk as its suppliers are typically professional
advisers. A statement by the Managers under the
Act has been published on the Managers’ website
atbailliegifford.com.
Future developments of the Company
The outlook for the Company for the next year is set
out in the Chair’s statement on pages 7 to 9 and in
the Managers’ report on pages 10 to 15.
The Strategic report which includes pages 6 to 56
was approved by the Board on 30 March 2026.
Jamie Skinner
Chair
Governance
report
This governance report, which includes
pages 57 to 83 outlines the Board’s
approach to the governance of your
Company. We believe that good governance
builds better outcomes and we are
committed to high standards of corporate
governance and transparency.
Governance report
58
Annual Report and Financial Statements 2026
Directors and
management
Directors
Jamie Skinner
Chair
Appointed 2018
Chair in 2023
Jamie Skinner was appointed a Director in 2018
and became Chair of the Audit Committee shortly
thereafter. He was appointed Chair in May 2023.
Jamie is a chartered accountant and a fellow of the
Chartered Institute for Securities and Investment.
He joined Cazenove & Co in 1989 as a corporate
finance executive working principally on investment
companies and also other sector IPO activity, and
in 1995 he was appointed Managing Director of the
Johannesburg office. In 1999 he joined MartinCurrie
Investment Management Limited as a director and
in2014 was appointed Head of Client Services.
Heserved as President and CEO of The China
Fund, Inc. until 2012, President and CEO of The
Taiwan Fund, Inc. until 2014 and President of the
Martin Currie Business Trust until 2015. He also
served on the boards of Martin Currie, Inc. and the
Martin Currie Japan Absolute Return Fund up to his
retirement from Martin Currie on 31 July 2018. He
was a non-executive director of Ediston Property
Investment Company plc from 2018 until it went
intovoluntary liquidation on 6 January 2024.
Other commitments
Jamie is Chairman of the Asian Opportunities
Absolute Return Fund Limited andAudit Chair of the
Ashoka India Equity Trust plc. He is also Chairman of
the R&A Foundation and is the investment trustee of
the Wilson Christie Foundation.
Contribution to the Board
Jamie brings long experience of investment trusts
from a corporate finance perspective and as
head of a client service team responsible for the
management of several funds. He has also been
a member of investment boards for many years,
serving in various capacities, including audit,
remuneration, nomination and marketing.
59
Baillie Gifford Shin Nippon PLC
Professor Sethu
Vijayakumar
Director
Appointed 2018
Professor Sethu Vijayakumar was appointed Director in 2018 and
is the Senior Independent Director. He is the Professor of Robotics
at the University of Edinburgh and the (Founding) Director of the
Edinburgh Centre for Robotics. He holds additional responsibility as
the Programme Director for Artificial Intelligence at The Alan Turing
Institute, London, where he helps shape the UK National roadmap in
Robotics and Autonomous Systems. He is a world-renowned roboticist,
pioneering the data driven control of several iconic robotic platforms
including a recent collaboration with the NASA Johnson Space Centre
on the Valkyrie humanoid robot being prepared for unmanned robotic
pre-deployment missions to Mars. He is a Fellow of the Royal Society
ofEdinburgh, a judge on BBC Robot Wars and winner of the 2015
TamDalyell Prize for Excellence in engaging the public with science.
Sethu has strong ties with Japan having spent seven years in Tokyo
during his PhD and postdoctoral training, still closely collaborates with
several R&D firms and multinationals on translational research projects
and is a fluent Japanese speaker.
Other commitments
Sethu holds the Chair of Robotics at the University of Edinburgh and is
the Programme Director for AI and Robotics at the Alan Turing Institute,
the UK’s National Institute for AI and Data Science.
Contribution to the Board
Sethu brings his substantial experience of working close to the latest
advances in technology as well as the startup ecosystem – especially
in the context of Japanese industries, SMEs, large scale governmental
initiatives and academia. His advisory and reviewer roles of large-scale
European R&D funding instruments such as Horizon 2020, DFG and
ERC as well as the Japanese JST Moonshot projects gives him excellent
visibility of current trends in cutting edge solutions to global challenges.
Governance report
60
Annual Report and Financial Statements 2026
Kevin Troup was appointed to the Board in 2020. He became the Chair
of the Audit Committee in May 2023. Kevin qualified as a Chartered
Accountant in London in 1993 with Coopers & Lybrand. He was then
anInvestment Manager managing Japanese small and mid caps with
Scottish Life from 1995. In 2000 he joined Martin Currie Investment
Management managing Japanese Smaller Companies and gained further
Japanese investment experience with Standard Life Investments from
2010 until retiring in 2018.
Other commitments
Kevin is adirector at Baring Fund Managers Limited as well as a
director of Kintail Trustees Limited, the corporate trustee of The
Robertson Trust charity where he is Chair of the InvestmentCommittee.
Contribution to the Board
Kevin brings audit, risk, compliance and smaller company investment
experience from across the financial services spectrum, including
investment trusts, open-ended funds and pension schemes. Kevin was
previously Audit Chair at European Assets Trust plc which was a
European small companies’ investment trust.
Kevin Troup
Director
Appointed 2020
Abigail Rotheroe was appointed to the Board in 2022 and is Chair
ofthe Nomination Committee. Abigail is a CFA® charterholder whose
investment career began at Schroder Capital Management in 1987
asan analyst on the Japanese desk. She worked in Hong Kong for
Schroders and then HSBC, managing specialist Asia/Pacific equity
portfolios for Japanese clients. On her return to London in 1994, she
joined Threadneedle Investments with responsibility for the
Threadneedle Asia Growth Fund, Threadneedle Asia and Pacific inc.
Japan Growth Fund and the TIML India Fund. Since 2013 Abigail has
been involved in social and impact investing and in her most recent
rolewas Investment Director of Snowball Impact Management which
she left in August 2022.
Other commitments
Abigail is a non-executive director of Templeton Emerging Markets
Investment Trust plc, Hydrogen Capital Growth plc and Greencoat
UKWind PLC. She is an Investment Committee member/co-optee of
Joseph Rowntree Charitable Trust, The Robertson Trust and a member
of WHEB’s Investment Advisory Committee.
Contribution to the Board
Abigail brings Japanese equity experience alongside her background
as a retail asset manager, analyst and most recently an investment
company investor. She also brings knowledge of sustainable and
responsible investment.
Abigail Rotheroe
Director
Appointed 2022
61
Baillie Gifford Shin Nippon PLC
Claire Finn was appointed to the Board in 2021.
Claire began her career in Japan in 1995 before
moving back to the UK in 1999. She worked for
Tokyo Mitsubishi Bank in London from 1999 to 2001.
In2001 she joined Henderson Global Investors
undertaking roles in client service and product
development. In 2005 Claire joined Merrill Lynch
Investment Managers (MLIM) as Vice President of
Product Development. MLIM was subsequently
bought by BlackRock and Claire moved into the
distribution team, rising to the position of Managing
Director of Defined Contributions, Unit Linked and
Platforms. Claire left BlackRock in 2018 and
transitioned to a portfolio career in 2019.
Other Commitments
Claire is currently the Chair of UBS Asset Management
Life Limited and a director of Artemis Fund Managers
Limited and Sparrows Capital Limited. She is also a
Director of The Law Debenture Corporation plc, where
she is Chair of the Remuneration Committee.
Contribution to the Board
Claire brings investment management experience
including distribution to retail and institutional
investors, product development and corporate
governance. She has also lived and worked in
Japanand speaks Japanese fluently.
The Directors listed on the prior pages were in office
during the year to 31 January 2026 and remained in
office as at 30 March 2026.
All Directors are members of the Nomination and
Audit Committees with the exception of Mr Skinner
who stepped down from the Audit Committee on
being appointed Chair of the Board in May 2023.
Claire Finn
Director
Appointed 2021
Governance report
62
Annual Report and Financial Statements 2026
Brian joined Baillie Gifford in 2006. He is head of
the Smaller Companies team and Lead Investment
Manager on the International Smaller Companies
strategy. He is also a member of the International
Growth Portfolio Construction Group. He is a CFA
Charterholder and graduated with an MSci and BA
(Hons) in Physics from the University of Cambridge in
2006.
Jared joined Baillie Gifford in 2016. He is co-manager
of Japan All Cap Strategy and Japanese Smaller
Companies Strategy. Prior to joining Baillie Gifford,
Jared spent two years as an Assistant Economist at
the Scottish government. Jared graduated with an MA
(Hons) in Economics from the University of Edinburgh
in 2012.
Managers and secretaries
The Company has appointed Baillie Gifford & Co
Limited, a wholly owned subsidiary of Baillie Gifford &
Co, as its Alternative Investment Fund Manager and
Company Secretaries. BaillieGifford & Co is an
investment management firm formed in 1927 out of
the legal firm Baillie &Gifford, WS, which had been
involved in investment management since 1908.
Baillie Gifford is one of the largest investment trust
managers in the UK and currently manages twelve
investment trusts. Baillie Gifford also manages unit
trusts and Open Ended Investment Companies,
together with investment portfolios on behalf of
pension funds, charities and other institutional clients,
both in the UK and overseas. Funds under the
management or advice of Baillie Gifford totalled
around £183 billion at 26 March 2026. Based in
Edinburgh, it is one of the leading privately owned
investment management firms in the UK, with
59partners and a staff of around 1,620.
Baillie Gifford & Co Limited and Baillie Gifford & Co
are both authorised and regulated by the Financial
Conduct Authority.
Brian Lum
Investment Manager
Appointed 2025
Jared Anderson
Deputy Manager
Appointed 2025
63
Baillie Gifford Shin Nippon PLC
The Directors present their report
together with the audited Financial
Statements of the Company for
the year to 31 January 2026.
Directors’
report
Corporate governance
The Corporate governance report is set out on
pages68 to 74 and forms part of this Report.
Managers and Company Secretaries
Baillie Gifford & Co Limited, a wholly owned
subsidiary of Baillie Gifford & Co, has been
appointed as the Company’s Alternative Investment
Fund Manager (‘AIFM’) and Company Secretaries.
Baillie Gifford & Co Limited has delegated portfolio
management services to Baillie Gifford & Co.
Dealing activity and transaction reporting have been
further sub-delegated to Baillie Gifford Overseas
Limited and Baillie Gifford Asia (Hong Kong) Limited.
The Investment Management Agreement sets out
the matters over which the Managers have authority
in accordance with the policies and directions of,
and subject to restrictions imposed by, the Board.
The Management Agreement is terminable on not
less than six months’ notice. Compensation fees
would only be payable in respect of the notice period
if termination were to occur sooner. The annual
management fee is 0.75% on the first £50m of net
assets, 0.65% on the next £200m of net assets and
0.55% on the remainder. The fees are calculated
and paid on a quarterly basis. With effect from
1February 2026, the annual management fee is
0.65% on the first £250 million of net assets and
0.55% on the remaining net assets, calculated and
payable quarterly.
The Board as a whole fulfils the function of the
Management Engagement Committee.
Governance report
64
Annual Report and Financial Statements 2026
The Board reviews investment performance and
monitors the arrangements for the provision of
investment management and secretarial services
to the Company on a continuous basis. A formal
evaluation of the Managers by the Board is
conducted annually. The Board’s annual evaluation
considers, amongst others, the following topics as
recommended by the AIC Guide ‘Evaluation of the
Manager’:
• Quality of Team;
• Investment Management;
• Commitment of Manager;
• Managing the Company;
• Promotion;
• Shareholders; and
• Management Agreement.
Following the most recent evaluation and
comprehensive review of strategy in December
2025, the Board is in agreement that the continuing
appointment of Baillie Gifford & Co Limited as
AIFMand the delegation of investment management
services to Baillie Gifford & Co on the terms
agreed,is in the interest of shareholders as a whole.
This is due to: the strength and experience of the
investment management team; the Managers’
commitment to the investment trust sector as a
whole and to the Japanese markets in particular;
and the Board’s continuing belief in the potential for
good long-term investment performance in relation
to the amended investment policy and strategy.
The Board also recognises the high quality of the
Managers’ secretarial, administrative and corporate
governance functions.
The Board considers that maintaining a low ongoing
charges ratio is in the best interest of shareholders.
The Board continues to give careful consideration to
the basis of the management fee.
Depositary
In accordance with the AIFM Regulations, the AIFM
must appoint a depositary to the Company. The
Bank of New York Mellon (International) Limited has
been appointed as the Company’s depositary.
The depositary’s responsibilities include cash
monitoring, safe keeping of the Company’s financial
instruments, verifying ownership and maintaining
a record of other assets and monitoring the
Company’s compliance with investment limits and
leverage requirements. The custody function is
also undertaken by The Bank of New York Mellon
(International) Limited (‘the custodian’).
Directors
Information about the Directors, including their
relevant experience and contribution to the Board,
can be found on pages 58 to 61.
In accordance with the principles of the UK
Corporate Governance Code, all Directors will retire
at the Annual General Meeting and offer themselves
for re-election.
Following formal performance evaluation the Board
considers that the performance of the Directors
continues to be effective and each remains
committed to the Company. Their contribution to the
Board is greatly valued and the Board recommends
their re-election to shareholders.
Director indemnification and insurance
The Company has entered into qualifying third
party deeds of indemnity in favour of each of the
Directors. The deeds cover any liabilities that may
arise to a third party, other than the Company, for
negligence, default or breach of trust or duty. The
Directors are not indemnified in respect of liabilities
to the Company, any regulatory or criminal fines,
any costs incurred in connection with criminal
proceedings in which the Director is convicted or
civil proceedings brought by the Company in which
judgement is given against him or her. In addition,
the indemnity does not apply to any liability to the
extent that it is recovered from another person.
Theindemnities were in force during the year to
31January 2026 and up to the date of approval of
this report.
The Company maintains Directors’ and Officers’
Liability Insurance.
Conflicts of interest
Each Director submits a list of potential conflicts of
interest and time commitments to the Nomination
Committee on an ongoing basis. The Committee
considers these carefully, taking into account the
circumstances surrounding them and makes a
recommendation to the Board on whether or not
the potential conflicts should be authorised. Board
authorisation is for a period of one year. Having
considered the lists of potential conflicts and time
commitments there were no situations which gave
rise to a direct or indirect interest of a Director which
conflicted with the interests of the Company.
65
Baillie Gifford Shin Nippon PLC
Dividend
Shin Nippon invests with the aim of maximising
capital growth rather than income. Retained
earnings are reinvested in the portfolio. The Board
recommends a final dividend of 0.69p per ordinary
share. If approved, the recommended final dividend
will bepaid on 26 May 2026 to shareholders on the
register at the close of business on 17 April 2026.
The ex-dividend date is 16 April 2026.
The Company’s dividend payment policy in respect
of ordinary shares is to pay a single final dividend
that will be broadly the minimum distribution to
maintain investment trust status.
Share capital
Capital structure
The Company’s capital structure (excluding treasury
shares) consists of 245,320,073 ordinary shares
of 2 pence each at 31 January 2026 (2025 –
279,491,301 ordinary shares of 2 pence each).
At31 January 2026, 68,932,412 shares were
held in treasury (2025 – 34,761,184). There are no
restrictions concerning the holding or transfer of the
Company’s ordinary shares and there are no special
rights attached to any of the shares. Treasury shares
do not receive distributions and are not entitled to
exercise the voting rights attached to them.
Subsequent to the year end and up to 26 March
2026, the Company has continued to buy back
shares under its existing authority and has
also completed the tender offer for 15% of the
Company’s issued share capital, details of which are
set out in the Chair’s statement. Shares purchased
pursuant to the tender offer have been held in
treasury. As at 26 March 2026, the Company had
205,700,895 ordinary shares of 2 pence each
in issue (excluding shares held in treasury) and
108,551,590 shares held in treasury.
Capital entitlement
On a winding up, after meeting the liabilities of the
Company, the surplus assets will be paid to ordinary
shareholders in proportion to their shareholdings.
Voting
Each ordinary shareholder present in person or by
proxy is entitled to one vote on a show of hands and,
on a poll, to one vote for every share held.
Information on the deadlines for proxy appointments
can be found on page 116.
Major interests in the Company’s shares
The Company has not received any notification of
major interests of 3.0% or more (for directly held
interests) in the voting rights of the Company as
at 31 January 2026. The Company has received
notification of the following interests of 5.0% or
more (for indirectly held interests) in the voting rights
of the Company as at 31 January 2026.
Name
No. of ordinary
2p shares
notified as
at 31 January
2026
% of
issue
1607 Capital Partners LLC 28,311,247 11.5
City of London Investment
Management Company Limited
29,805,918 12.1
Lazard 13,602,797 5.5
Subsequent to the year end on 12 February 2026
the Company received notification that 1607 Capital
Partners LLC held 24,491,752 shares being 10.0%
of the shares in issue. On 20 March 2026 the
Company received notification that City of London
Investment Management Company Limited held
23,608,128 being 11.4% of the shares in issue.
There have been no further notifications of major
interests in the Company’s shares notified up to
26March 2026.
Analysis of shareholders at 31 January
2026
Number of
shares held
2026
%
2025
Number of
shares held
2025
%
Institutions 99,955,164 40.7 100,406,183 35.9
Intermediaries 137,439,791 56.0 172,838,053 61.8
Individuals* 2,120,761 0.9 2,724,936 1.0
Marketmakers 5,804,357 2.4 3,522,129 1.3
245,320,073 100.0 279,491,301 100.0
*
Includes all holdings under 5,000 shares.
Annual General Meeting
Share issuance authority
At the last Annual General Meeting, the Directors
were granted authority to issue shares up to an
aggregate nominal amount of £1,802,428.40 and
to issue shares or sell shares held in treasury for
cash on a non pre-emptive basis for cash up to
an aggregate nominal amount of £540,782.60
representing 10% of the issued share capital of the
Company as at 31 March 2025. Such authorities
will expire at the conclusion of the Annual General
Meeting to be held on 21 May 2026.
Governance report
66
Annual Report and Financial Statements 2026
Resolution 12 in the Notice of Annual General
Meeting seeks a general authority for the Directors
to issue ordinary shares up to an aggregate
nominal amount of £1,371,202.16. This amount
represents 33.33% of the nominal value of the
issued share capital excluding treasury shares at
26 March 2026 and meets institutional guidelines.
No issue of ordinary shares will be made pursuant
to the authorisation in Resolution 12 which would
effectively alter the control of the Company without
the prior approval of shareholders in general meeting.
Resolution 13, which is proposed as a special
resolution, seeks authority for the Directors to
issueshares or sell shares held in treasury on
anonpre-emptive basis for cash (i.e. without
firstoffering such shares to existing shareholders
pro-ratato their existing holdings) up to an
aggregate nominal amount of £411,401.80
(representing 10% of the issued ordinary share
capital of the Company excluding treasury shares
as at 26 March 2026). The authorities sought
in Resolutions 12 and13 will continue until the
conclusion of the Annual General Meeting to
beheldin 2027 or on the expiry of 15 months
fromthe passing of the resolutions, ifearlier.
Such authorities will only be used to issue shares
orsell shares from treasury at a premium to net
asset value and only when the Directors believe that
it would be in the best interests of the Company
to do so. The Directors believe that the ability to
buy-back shares at a discount and re-sell them or
issue new shares at a premium are useful tools in
smoothing supply and demand. During the year to
31 January 2026 the Company issued no shares.
Between 1 February and 26 March 2026 the
Company issued no further shares.
108,551,590 shares were held in treasury as at
26March 2026.
Market purchases of own shares by the Company
At the last Annual General Meeting, the Company
was granted authority to purchase up to 40,531,656
ordinary shares (equivalent to 14.99% of its
issued share capital). This authority expires at the
forthcoming Annual General Meeting. The Directors
are seeking shareholders’ approval at the Annual
General Meeting to renew the authority to make
market purchases of ordinary shares up to an
amount representing approximately 14.99% of the
Company’s ordinary shares in issue at the date of
passing of the Resolution, such authority to expire
atthe Annual General Meeting of the Company to
beheld in 2027.
34,171,228 shares were bought back during the
year under review. Between 1 February and 26 March
2026, excluding the shares bought back as part of
the recent 15% unconditional tender, the Company
bought back 2,821,169 shares.
The principal reasons for share buy backs are:
i. to enhance net asset value for continuing
shareholders by purchasing shares at a discount
to the prevailing net asset value; and
ii. to address any imbalance between the supply of
and demand for the Company’s shares that results
in a discount of the quoted market price to the
published net asset value per share.
The Company may hold bought back shares ‘in
treasury’ and then:
a. sell such shares (or any of them) for cash (or its
equivalent under the Companies Act 2006); or
b. cancel such shares (or any of them).
All buy backs will initially be held in treasury. Shares
will only be sold from treasury at a premium to the
net asset value per ordinary share.
The Company shall not be entitled to exercise the
voting rights attaching to treasury shares or be
entitled to any dividend distributions.
In accordance with the Listing Rules of the UK
Listing Authority, the maximum price (excluding
expenses) that may be paid on the exercise of the
authority must not exceed the higher of:
i. 5% above the average closing price on the
London Stock Exchange of an ordinary share over
the 5 business days immediately preceding the
date of purchase; and
ii. the higher of the last independent trade and the
highest current independent bid on the London
Stock Exchange.
The minimum price (exclusive of expenses) that
may be paid will be the nominal value of an ordinary
share. Purchases of shares will be made within
guidelines established, from time to time, by the
Board. The Company does not have any warrants
or options in issue. Your attention is drawn to
Resolution 13 in the Notice of Annual General
Meeting.
67
Baillie Gifford Shin Nippon PLC
This authority, if conferred, will only be exercised
if to do so would result in an increase in net
asset value per ordinary share for the remaining
shareholders and if it is considered in the best
interests of shareholders generally.
Financial instruments
The Company’s financial instruments comprise
itsinvestment portfolio, cash balances, bank
borrowings and debtors and creditors that arise
directly from its operations such as sales and
purchases awaiting settlement and accrued income.
The financial risk management objectives and
policies arising from its financial instruments and
theexposure of the Company to risk are disclosed
innote 18 to the Financial Statements.
Articles of Association
The Company’s Articles of Association may only be
amended by special resolution at a general meeting
of shareholders.
Disclosure of information to Auditor
The Directors confirm that so far as each of
the Directors is aware there is no relevant audit
information of which the Company’s Auditor is
unaware and the Directors have taken all the steps
that they might reasonably be expected to have
taken as Directors in order to make themselves aware
of any relevant audit information and to establish that
the Company’s Auditor is aware of that information.
Independent Auditor
Johnston Carmichael LLP is willing to continue
in office and in accordance with section 489
and section 491(1) of the Companies Act 2006,
resolutions concerning its reappointment and
remuneration will be submitted to the Annual
General Meeting.
Post balance sheet events
Following shareholder approval on 18 February
2026, the Company undertook a tender offer for
up to 15% of its issued share capital (excluding
shares held in treasury), details of which are set out
in the circular dated 23 January 2026. Under the
terms of the tender offer, eligible shareholders were
entitled to tender shares at a price equal to the Net
Asset Value per share as at the calculation date,
less the costs of the tender and a 2% discount. The
tender offer was oversubscribed and, accordingly,
36,798,009 ordinary shares were purchased on
19 March 2026. Shares purchased pursuant to the
tender have been held in treasury.
In addition, as disclosed in the Dividend section
on page 65, the Board has recommended a final
dividend of 0.69p per ordinary share in respect of
the year ended 31 January 2026, payable on 26 May
2026 to shareholders on the register at the close of
business on 17 April 2026.
As the approval and completion of the tender offer
and the declaration of the dividend occurred after the
year end, these represent non-adjusting events under
IAS 10 (or FRS 102 Section 32). Accordingly, the
Financial Statements for the year ended 31January
2026 do not reflect the impact of theseevents.
Greenhouse gas emissions and Streamlined
Energy and Carbon Report (‘SECR’)
All of the Company’s activities are outsourced
to third parties. The Company therefore has no
greenhouse gas emissions to report from its
operations, nor does it have responsibility for
any other emissions producing sources under
the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013. For the
reasons set out above, the Company considers
itselfto be a low energy user and therefore is not
required to disclose energy and carbon information
under the SECR regulations.
Bribery Act
The Company has a zero tolerance policy towards
bribery and is committed to carrying out business
fairly, honestly and openly. The Managers also adopt
a zero tolerance approach and have policies and
procedures in place to prevent bribery.
Criminal Finances Act 2017
The Company has a commitment to zero tolerance
towards the criminal facilitation of tax evasion.
Recommendation
The Directors consider each resolution being
proposed at the Annual General Meeting to be in the
best interests of the Company and its shareholders
as a whole and they unanimously recommend that
all shareholders vote in favour of them, as they
intend to do where possible in respect of their
own beneficial holdings of shares which amount
in aggregate to 194,189 shares, representing
approximately 0.08% of the issued share capital
ofthe Company at 31 January 2026.
On behalf of the Board
Jamie Skinner
Chair
30 March 2026
Governance report
68
Annual Report and Financial Statements 2026
Compliance
The Board confirms that the Company has complied
throughout the year under review with the relevant
provisions of the Code and the recommendations of
the AIC Code. The Code includes provisions relating
to the role of the chief executive, executive directors’
remuneration and the need for an internal audit
function. Given that the Company is an externally-
managed investment trust, the Board considers
these provisions are not relevant to the Company
(the need for an internal audit function specific to
the Company has been addressed on page 76).
The FRC has confirmed that AIC member companies
who report against the AIC Code will be meeting
their obligations in relation to the UK Code (the AIC
Code can be found at theaic.co.uk).
The Board
The Board comprises five Directors, all of whom
arenon-executive. The Board appoints the
Managersand Secretaries and approves the termsof
the investment management agreement. It has a
number of matters reserved for its approval including
strategy, investment policy, currency hedging,
gearing, share buy back and issuance policy, treasury
matters, dividend and corporate governance policy.
A separate meeting devoted to strategy is held each
year. The Board also reviews the financial statements,
investment transactions, revenue budgets and
investment performance. Fulland timely information is
provided to the Board to enable the Board to function
effectively and to allowDirectors to discharge their
responsibilities. The Chair, Mr J Skinner, is responsible
for organising the business of the Board, ensuring
its effectiveness and settingits agenda. Mr KJ Troup
replaced MrJSkinner as the Audit Committee Chair
in 2023. The executive responsibility for investment
management has been delegated tothe Company’s
Alternative Investment Fund Manager (‘AIFM’), Baillie
Gifford & Co Limited, and in the context of a Board
comprising entirely non-executive directors there is no
chief executive officer. Professor S Vijayakumar is the
Senior Independent Director.
Corporate
governance report
The Board is committed to
achieving and demonstrating
high standards of corporate
governance. This statement
outlines how the principles of the
2018 UK Corporate Governance
Code, (the ‘Code’) which can
be found at frc.org.uk, and the
principles of the Association of
Investment Companies (‘AIC’)
Code of Corporate Governance
issued in 2024 were applied
throughout the financial year. The
AIC Code provides a framework
of best practice for investment
companies and can be found at
theaic.co.uk.
69
Baillie Gifford Shin Nippon PLC
Board of Directors
Comprises independent
non-executive directors*
Chair: Jamie Skinner
Senior Independent Director:
Professor Sethu Vijayakumar
Audit
Committee
Chair: Kevin Troup
Purpose: The primary purpose of the
Company’s Audit Committee is to provide
oversight of the financial reporting process,
the audit process, the Company’s system
of internal controls and compliance with
laws and regulations.
Nomination
Committee
Chair: Abigail Rotheroe
Purpose: The main purpose of the
Nomination Committee is to oversee Board
recruitment and succession planning as
well as Board appraisals including
identifying training needs.
Third-party service providers
appointed by the Board
Alternative Investment Fund Managers and Company Secretaries:
Baillie Gifford & Co Limited (wholly owned
subsidiary of Baillie Gifford & Co)
Dealing activity and transaction reporting:
Baillie Gifford Overseas Limited and
Baillie Gifford Asia (Hong Kong) Limited
Johnston
Carmichael LLP
Auditor
The Bank of
New York Mellon
(International) Limited
Depositary
Computershare
Investor Services
PLC
Registrar
Winterflood
Securities Ltd
Company broker
* The independent non-executive directors are made up of Claire Finn, Abigail Rotheroe, Jamie Skinner, Kevin Troup and Professor Sethu Vijayakumar.
Furtherdetails on their experience and contribution to the Board can be found on pages 58 to 61.
Governance report
70
Annual Report and Financial Statements 2026
The Directors believe that the Board has a balance
of skills and experience that enable it to provide
effective strategic leadership and proper governance
of the Company. Information about the Directors,
including their relevant experience, can be found
onpages 58 to 61.
The Directors recognise the importance of Board
succession planning. The composition of the Board
and the succession plan are reviewed annually
toensure there is an appropriate balance of skills,
experience, length of service and diversity.
There is an agreed procedure for Directors to seek
independent professional advice if necessary at the
Company’s expense.
Appointments
The terms and conditions of Directors’ appointments
are set out in formal letters of appointment which are
available for inspection on request.
Under the provisions of the Company’s Articles of
Association, a Director appointed during the year is
required to seek election by shareholders at the next
Annual General Meeting.
Independence of Directors
In accordance with the principles of the UK
Corporate Governance Code, all Directors will offer
themselves for re-election annually.
All the Directors are considered by the Board to
beindependent of the Company and the Managers
and free of any business or other relationship
thatcould interfere with the exercise of their
independent judgement.
The Board is not controlled by long serving Directors.
Policy on tenure of the Chair
The Board recognises the importance of an
independent and effective chair. In the absence
of exceptional circumstances, the Chair will retire
at the Annual General Meeting following the ninth
anniversary of their appointment in accordance
withthe UK Code of Corporate Governance.
Meetings
There is an annual cycle of Board meetings which
is designed to address, in a systematic way, overall
strategy, review of investment policy, investment
performance, marketing, revenue budgets, dividend
policy and communication with shareholders. The
Board considers that it meets sufficiently regularly
todischarge its duties effectively.
Directors’ attendance at meetings
Board
Audit
Committee
Nomination
Committee
Number of meetings 5 4 1
J Skinner* 5 – 1
CEC Finn
† 4 4 1
AE Rotheroe 5 4 1
KJ Troup 5 4 1
S Vijayakumar 5 4 1
*
J Skinner is not a member of the Audit Committee but was in attendance.
† Ms Finn was unable to attend a Board meeting due to a personal
bereavement.
The table above shows the attendance record for
thecore Board and Committee meetings held during
the year. The Annual General Meeting was attended
by all the Directors serving at that date, other than
Ms CEC Finn, who was unable to attend due to a
personal bereavement.
Nomination Committee
The Nomination Committee consists of the
wholeBoard due to the small size of the Board.
MsAE Rotheroe is the Chair. The Committee
meets at least annually andat such other times
as may be required. The Committee has written
terms of reference that include reviewing the
Board, identifying and nominating new candidates
for appointment to the Board, Board appraisal,
succession planning and training. The Committee
also considers whether Directors should be
recommended for re-election byshareholders.
The Committee is also responsible for considering
Directors’ potential conflicts of interest and for
making recommendations to the Board on whether
or not the potential conflicts should be authorised.
The Committee’s terms of reference are available
onrequest from the Company and on the Company’s
website: shinnippon.co.uk.
Board diversity
Diversity policy
Appointments to the Board are made on merit
and based on objective criteria, including the
promotion of diversity of gender, social and ethnic
backgrounds, and cognitive and personal strengths.
The priority in succession planning and appointing
new Directors is to identify candidates with the best
range of skills and experience to complement those
of the existing Directors, with a view to ensuring that
the Board remains well placed to help the Company
achieve its investment and governance objectives.
71
Baillie Gifford Shin Nippon PLC
The following disclosures are provided in respect of
the FCA Listing Rules targets that: i) 40% of a board
should be women; ii) at least one senior role should be
held by a woman; and iii) at least one board member
should be from a non-white ethnic background, as
defined by the Office of National Statistics (‘ONS’)
criteria. As an externally managed investment
company with no chief executive officer (CEO) or
chief financial officer (CFO), the roles which qualify
as senior under FCA guidance are Chair and Senior
Independent Director (SID). The Board also considers
Audit Committee Chair and Nomination Committee
Chair to represent senior roles within this context.
At 31 January 2026, which shall be used as the
reference date for the disclosures in accordance
with the Listing Rules 9.8.6R(9), the Board met
the target on percentage of women and on ethnic
background but not the target of a woman in a
seniorrole as classified by the FCA. The Board does
consider the chair of the Nomination Committee
to be a senior role and this position was held by
a woman, Ms A Rotheroe. The Board considers
that its small size is the principal reason why the
other Listing Rule targets were not met. The Board
supports, and is ambitious to meet, all the Listing
Rule diversity targets and will continue to review its
size and composition both as part of its refreshment
cycle and more widely. There have beenno changes
to Board membership since 31January 2026 and
data has been collected on a self-reporting basis.
Number of
Board members
Percentage
of the Board
Senior
roles
Men 3 60% 2*
Women 2 40% 0
†
Prefer not to say – – –
* The Board also considers Audit Committee Chair to be a senior role.
Therole of Audit Committee Chair is currently held by a man.
†
The Board also considers Nomination Committee Chair to be a senior role.
The role of Nomination Committee Chair is currently held by a woman.
Number of
Board members
Percentage
of the Board
Senior
roles
White British or
OtherWhite (including
minority white groups)
4 80% 1*
Asian/Asian British 1 20% 1
Prefer not to say – – –
* The Board also considers Audit Committee Chair and Nomination
Committee Chair to be senior roles. The ethnic background of
theAuditCommittee Chair is white. The ethnic background of the
Nomination Committee Chair is white.
Board composition
The Committee reviewed the composition of the
Board during the year in consideration of succession
planning and developing a diverse pipeline.
Performance evaluation
During the year, the Board again utilised Boardforms,
an independent firm which assists companies with
the design and execution of board evaluations,
to facilitate the performance evaluation of the
Chair, each Director, the Board as a whole and its
Committees. Each Director, including the Chair, was
invited to consider and respond to the evaluation
questionnaires. The performance of each Director
was appraised by Ms A Rotheroe, chair of the
Nomination Committee, while the appraisal of the
Chair was led by Mr S. Vijayakumar, the Company’s
Senior Independent Director. The appraisals and
evaluations considered, amongst other criteria,
the balance of skills and experience on the Board,
training and development requirements, the
contributions of individual Directors, and the overall
effectiveness of the Board and its Committees.
Following this process it was concluded that there was
a diverse range of skills within the Board and that the
performance of each Director, the Chair, the Board
and its Committees continues to be effective and each
Director remains committed to theCompany.
A review of the Chair’s and other Directors’
commitments was carried out on 3 December 2025
and the Nomination Committee is satisfied that they
are capable of devoting sufficient time to the Company.
Induction and training
New Directors are provided with an induction
programme which is tailored to the particular
circumstances of the appointee. Regular briefings are
provided on changes in regulatory requirements that
could affect the Company and Directors. Directors
receive other relevant training as necessary.
Remuneration
As all the Directors are non-executive, there is
no requirement for a separate Remuneration
Committee. Directors’ fees are considered by
the Board as a whole within the limits approved
by shareholders. The Company’s policy on
remuneration is set out in the Directors’
Remuneration report on pages 78 to 81.
Management Engagement Committee
The Directors have considered that a separate
Management Engagement Committee is not required
given the small size of the Board.
Audit Committee
The report of the Audit Committee is set out on
pages 75 to 77.
Governance report
72
Annual Report and Financial Statements 2026
Internal controls and risk management
The Directors acknowledge their responsibility
forthe Company’s risk management and internal
control systems and for reviewing their
effectiveness. The systems are designed to manage
rather than eliminate the risk of failure to achieve
business objectives and can only provide reasonable
but not absolute assurance against material
misstatement orloss.
The Board confirms that there is an ongoing
process for identifying, evaluating and managing
the significant risks faced by the Company in
accordance with the FRC guidance ‘Guidance on
Risk Management, Internal Control and Related
Financial and Business Reporting’.
The practical measures in relation to the design,
implementation and maintenance of control policies
and procedures to safeguard the Company’s
assets and to manage its affairs properly, including
the maintenance of effective operational and
compliance controls have been delegated to the
Managers and Secretaries.
The Board oversees the functions delegated to
the Managers and Secretaries and the controls
managed by the AIFM in accordance with the UK
Alternative Investment Fund Managers Regulations
(as detailed below). Baillie Gifford & Co’s Internal
Audit and Compliance Departments and the
AIFM’s permanent risk function provide the Audit
Committee with regular reports on their monitoring
programmes. The reporting procedures for these
departments are defined and formalised within
a service level agreement. Baillie Gifford & Co
conducts an annual review of its system of internal
controls which is documented within an internal
controls report that complies with ISAE 3402.
This report is independently reviewed by Baillie
Gifford & Co’s Auditor and a copy is provided to the
Audit Committee. The report is reviewed by Baillie
Gifford’s Business Risk Department, which reports
a summary of key findings to the Audit Committee
and highlights any areas of concern. The Audit
Committee also has access to the full report and the
opportunity to review its contents and challenge the
Managers as appropriate.
A report identifying the material risks faced by the
Company and the key controls employed to manage
these risks is reviewed by the Audit Committee.
These procedures ensure that consideration is given
regularly to the nature and extent of risks facing the
Company and that they are being actively monitored.
Where changes in risk have been identified during
the year they also provide a mechanism to assess
whether further action is required to manage
theserisks.
The Directors confirm that they have reviewed the
effectiveness of the Company’s risk management
and internal controls systems, which accord with
the FRC ‘Guidance on Risk Management, Internal
Control and Related Financial and Business
Reporting’, and they have procedures in place
toreview their effectiveness on a regular basis.
Nosignificant weaknesses were identified in the
yearunder review and up to the date of this Report.
The Board confirms that these procedures have
been in place throughout the Company’s financial
year and continue to be in place up to the date
ofapproval of this Report.
During the year the Audit Committee considered
the changes required by the new AIC Corporate
Governance Code, published in 2024. Within the
new Code, Provision 34, effective for accounting
periods starting on or after 1 January 2026, requires
boards to monitor and, at least annually, review the
effectiveness of the company’s risk management
and internal control framework. The monitoring and
review should cover all material controls including
financial, operational, reporting and compliance.
Boards are required to report on that review in
their annual report providing; a description of
how the board has monitored and reviewed the
effectiveness of the framework, a declaration of the
material controls as at the balance sheet date, and
description of any material controls not operating
effectively as at the balance sheet date and action
taken to improve them.
In preparation for reporting against Provision 34,
the Audit Committee carried out a review of the
Company’s risk matrix and principal risks and
have agreed a timeline with the Managers and
Secretaries to develop an appropriate process
for the identification of material controls, how
assurance will be obtained and the evidence to
support the Board’s attestation in this regard in the
2026 Annual Report and Financial Statements. As
noted above, effective risk management and internal
control systems were in place during the year under
review and Provision 34 is expected to result in
changes to disclosures in the Annual Report and
Financial Statements rather than an overhaul of risk
management and internalcontrols.
To comply with the UK Alternative Investment
Fund Managers Regulations, The Bank of New
York Mellon (International) Limited acted as the
Company’s Depositary and Baillie Gifford & Co
Limited as its AIFM.
73
Baillie Gifford Shin Nippon PLC
The depositary’s responsibilities include cash
monitoring, safe keeping of the Company’s
financial instruments, verifying ownership and
maintaining a record of other assets and monitoring
the Company’s compliance with investment limits
and leverage requirements. The depositary is
liable for the loss of financial instruments held
in custody. Thedepositarywill ensure that any
delegate segregates the assets of the Company.
TheCompany’s depositary also acts as the Company’s
custodian. The custodian prepares reports on its key
controls and safeguards which are independently
reviewed by its Auditor. These reports are reviewed
by Baillie Gifford’s Business Risk Department and a
summary of the key points is reported to the Audit
Committee, with any concerns investigated. The Audit
Committee also has access to these reports and may
review them directly as part of its oversight of the
Company’s control environment.
The Company’s registrar, Computershare Investor
Services PLC, provides reports on its internal control
framework which are subject to independent review.
These reports are reviewed by Baillie Gifford’s
Business Risk Department and a summary of the key
findings is reported to the Audit Committee, with any
matters of concern investigated. The Audit Committee
also has access to these reports and the opportunity
to review them directly and to raise any queries with
the Managers or the registrar as appropriate.
The depositary provides the Audit Committee with
half-yearly reports on its monitoring activities.
The AIFM has established a permanent risk
management function to ensure that effective risk
management policies and procedures are in place
and to monitor compliance with risk limits. The AIFM
has a risk management policy which covers the risks
associated with the management of the portfolio,
and the adequacy and effectiveness of this policy
is reviewed and approved at least annually. This
review includes the risk management processes and
systems and limits for each risk area.
The risk limits, which are set by the AIFM and
approved by the Board, take into account the
objectives, strategy and risk profile of the portfolio.
These limits, including leverage (see page 120),
are monitored and the sensitivity of the portfolio to
key risks is undertaken periodically as appropriate
to ascertain the impact of changes in key variables
in the portfolio. Exceptions from limits monitoring
and stress testing undertaken by Baillie Gifford’s
Business Risk Department are escalated to the
AIFM and reported to the Board along with remedial
measures being taken.
Going concern
In accordance with the Financial Reporting
Council’sguidance on going concern and liquidity risk,
the Directors have undertaken a rigorous reviewof the
Company’s ability to continue as a going concern.
The Company’s principal and emerging risks
include market risk, liquidity risk and credit risk.
An explanation of these risks and how they are
managed is contained in note 18 to the Financial
Statements. The Board has, in particular, considered
the impact of heightened market volatility, owing
to macroeconomic and geopolitical concerns. The
Board has reviewed the results of specific leverage
and liquidity stress testing, but does not believe
the Company’s going concern status is affected.
Stress tests are applied to the portfolio to identify
the commitment leverage of the Company in two
scenarios: (i) gross assets reduce by 25%; and
(ii)gross assets reduce by 50%. Stress tests are
also performed to determine the impact on revenue
earnings per share as a result of an increase and
decrease in projected portfolio income of 25%.
Additionally, the Board has considered the 15% tender
offer which was oversubscribed and completed on
19 March 2026. The impact of the 15% tender offer
has been reflected in the Company’s forecasts and
stress testing and was taken into account as part of
the Board’s going concern assessment, and the Board
does not consider that the Company’s going concern
status isaffected.
The Company’s assets, which are primarily investments
in quoted securities (Level 1) and are readily realisable,
exceed its liabilities significantly and could be sold to
repay borrowings if required. Allborrowings require
the prior approval of the Board. Gearing levels and
compliance with loan covenants are reviewed by the
Board on a regular basis. As at 31 January 2026, the
Company had a net current liability of £52.8 million
primarily as a result of a revolving credit facility which
is repayable on a three monthly basis although the
facility itself does not mature until 2027. Following
the refinancing of the remaining ING loans with Bank
of America on 28 February 2025, the Company’s
loan facilities do not mature until November 2027 as
disclosed in note 11 on page 103. The Company has
continued to comply with the investment trust status
requirements of section 1158 of the Corporation
Tax Act 2010 and the Investment Trust (Approved
Company) Regulations 2011.
Governance report
74
Annual Report and Financial Statements 2026
Accordingly, the Financial Statements have been
prepared on the going concern basis as it is the
Directors’ opinion, having assessed the principal
and emerging risks and other matters set out in the
Viability Statement on page 53, that the Company
will continue in operational existence for a period of
at least twelve months from the date of approval of
these Financial Statements.
Relations with shareholders
The Board places great importance on communication
with shareholders. The Company’s Investment
Manager meets regularly with shareholders and
theirrepresentatives and reports to the Board.
TheCompany broker and the Managers’ sales team
also have regular contact with current and potential
shareholders. The Chair and Directors are available to
meet with shareholders as appropriate and did so in
the year ended 31 January 2026. Shareholders
wishing to communicate with any members of
theBoard may do so by writing to them at the
Company’s registered office, emailing the Managers
at enquiries@bailliegifford.com or through the
Company’s broker, Winterflood Securities Ltd (see
contact details in Company information on page 129).
Details of engagement with shareholders are included
on page 56.
The Company’s Annual General Meeting provides
a forum for communication with all shareholders.
The level of proxies lodged for each resolution
is announced at the meeting and is published
at shinnippon.co.uk subsequent to the meeting.
Thenotice period for the Annual General Meeting
isat least twenty working days.
Shareholders and potential investors may obtain up-to-
dateinformation on the Company at shinnippon.co.uk.
Corporate governance and stewardship
The Company has given discretionary voting powers
to Baillie Gifford & Co. The Managers vote against
resolutions they consider may damage shareholders’
rights or economic interests and report their actions
to the Board.
The Company believes that it is in the shareholders’
interests to consider environmental, social and
governance (‘ESG’) factors when selecting and
retaining investments and have asked the Managers
to take these issues into account. The Managers do
not exclude companies from their investment universe
purely on the grounds of ESG factors but adopt a
positive engagement approach whereby matters are
discussed with management with the aim of improving
the relevant policies and management systems
and enabling the Managers to consider how ESG
factors could impact long term investment returns.
The Managers’ stewardship principles and examples
of portfolio company engagement are set out on
pages18 to 22 and the statement of compliance
with the UK Stewardship Code can be found on the
Managers’ website at bailliegifford.com. The Managers’
policy has been reviewed and endorsed by the Board.
Baillie Gifford & Co has considered the Sustainable
Finance Disclosure Regulation (‘SFDR’) and further
details can be found on page 124.
Climate change
The Board recognises that climate change poses a
serious threat to our environment, our society and
to economies and companies around the globe.
Addressing the underlying causes is likely to result
in companies that are high emitters of carbon facing
greater societal and regulatory scrutiny and higher
costs to account for the true environmental impact
of their activities. The Managers’ pursuit of long term
growth opportunities typically involves investment
in entrepreneurial, disruptive and technology-driven
businesses. These companies are often capital-light
with a low carbon footprint. The Managers’ report
provides some examples of new investments that
address ESG themes, including climate change.
The Manager has engaged an external provider to
map the carbon footprint of the portfolio, using the
information to prioritise engagement and understand
what higher emitting companies are doing to
manage climate risk better. This analysis estimates
that the carbon intensity of the Shin Nippon portfolio
is 73% lower than the comparative index (MSCI
Japan Small Cap Index). Carbon intensity measures
the carbon efficiency of the portfolio per unit of
output and assesses the portfolio’s exposure to
carbon-intensive companies.
Baillie Gifford’s Task Force on Climate-Related
Financial Disclosures (‘TCFD’) Climate Report
isavailable on the Managers’ website at
bailliegifford.com. A Shin Nippon-specific TCFD
climate report is also available on the Company’s
page of the Managers’ website at shinnippon.co.uk.
The Managers are members of the Asian Corporate
Governance Association and International Corporate
Governance Network.
On behalf of the Board
Jamie Skinner
Chair
30 March 2026
75
Baillie Gifford Shin Nippon PLC
The Audit Committee consists of
all Directors with the exception of
the Chair, Mr Skinner who attends
by invitation. The members of
theCommittee consider that
theyhave the requisite financial
skills and experience to fulfil the
responsibilities of the Committee.
Mr K Troup, Chair of the Committee,
is a Chartered Accountant.
Audit
Committee report
The Committee’s authority and duties are clearly
defined within its written terms of reference
which are available on request from the Company
Secretaries and at shinnippon.co.uk. The terms of
reference are reviewed annually.
The Committee’s effectiveness is reviewed on an
annual basis as part of the Board’s performance
evaluation process. Mr Troup and Ms Rotheroe have
recent and relevant financial experience.
At least once a year the Committee meets with the
external Auditor without any representative of the
Managers being present.
Main activities of the Committee
The Committee met four times during the year, with
two of the meetings focused on the review of the
Company’s private company valuations. Johnston
Carmichael LLP attended three of the meetings.
Baillie Gifford & Co’s Internal Audit and Compliance
Departments and the AIFM’s permanent risk function
provided reports on their monitoring programmes for
the two meetings focused on governance matters
and the approval of the financial statements.
The matters considered, monitored and reviewed
by the Committee during the course of the year
included the following:
• the results announcement and the Annual and
Interim Reports;
• the Company’s accounting policies and practices
and the implementation of the Managers’ valuation
policy for investments in private (unlisted)
companies;
• the regulatory changes impacting the Company;
• the fairness, balance and understandability of
the Annual Report and Financial Statements and
whether it provided the information necessary
for shareholders to assess the Company’s
performance, business model and strategy;
Governance report
76
Annual Report and Financial Statements 2026
• the effectiveness of the Company’s internal
control and risk management systems;
• re-appointment, remuneration and engagement
letter of the external Auditor;
• whether the audit services contract should be put
out to tender;
• the policy on the engagement of the external
Auditor to supply non-audit services;
• the independence and objectivity of the external
Auditor and the effectiveness of the external audit
process;
• the need for the Company to have its own internal
audit function;
• internal controls reports received from the
Managers, Custodian and Registrar;
• written assurance from the Company’s key
third party service providers regarding whether
they have been aware of any fraud or had any
suspicions of fraud over the Company’s financial
year; and
• the arrangements in place within Baillie Gifford
&Co whereby their staff may, in confidence, raise
concerns about possible improprieties in matters
of financial reporting or other matters.
Internal audit
The Committee continues to believe that the
compliance and internal controls systems and the
internal audit function in place within the Managers
provide sufficient assurance that a sound system
of internal control, which safeguards shareholders’
investment and the Company’s assets, is maintained.
An internal audit function, specific to the Company
is therefore considered unnecessary.
Financial reporting
The Committee considers that the most significant
issues likely to affect the Financial Statements are
the existence and valuation of quoted investments,
as they represent 94.2% of total assets.
Quoted investments
The majority of the investments are in quoted
securities and market prices are readily available
from independent external pricing sources. The
Committee reviewed Baillie Gifford’s Report on
Internal Controls which details the controls in place
regarding the recording and pricing of investments.
The Managers agreed the prices of all the quoted
investments at 31 January 2026 to external
price sources and the holdings were agreed to
confirmations from the Company’s Custodian.
Private company (unlisted) investments
The Committee reviewed the Managers’ valuation
approach for investments in private (unlisted)
companies (as described on page 40) and
approved the valuations of the private company
(unlisted) investments following a detailed review
of the valuation of each investment and relevant
challenge where appropriate. The Managers agreed
the holdings in certificated form to confirmations
from the Company’s custodian and holdings
of uncertificated private company (unlisted)
investments were agreed to confirmations from
therelevant investee companies.
The Managers confirmed to the Committee that they
were not aware of any material misstatements in the
context of the Financial Statements as a whole and
that the Financial Statements are in accordance with
applicable law and accounting standards.
Internal controls and risk management
The Committee reviewed the effectiveness of
theCompany’s risk management and internal
controls systems as described on pages 72 and 73.
No significant weaknesses were identified in the
year under review.
External Auditor
To fulfil its responsibility regarding the independence
of the external Auditor, the Committee reviewed:
•
the audit plan f
or the current year;
•
a repor
t from the Auditor describing their
arrangements to manage Auditor independence
and received confirmation of their independence;
and
•
the proposed audit f
ee and extent of non-audit
services provided by the external Auditor. For the
year to 31 January 2026 the proposed audit fee
was £43,000 and there were no non-audit fees
forthe year to 31 January 2026 (2025 – nil).
77
Baillie Gifford Shin Nippon PLC
To assess the effectiveness of the external Auditor,
the Committee reviewed and considered:
• the Auditor’s fulfilment of the agreed audit plan;
and
• feedback from the Secretaries on the performance
of the audit team.
To fulfil its responsibility for oversight of the external
audit process the Committee considered and
reviewed:
• the Auditor’s engagement letter;
• the Auditor’s proposed audit plan;
• the audit fee; and
• a report from the Auditor on the conclusion of
theaudit.
The audit partner responsible for the audit will be
rotated at least every five years in accordance with
professional and regulatory standards in order to
protect independence and objectivity and to provide
fresh challenge to the business. Mr Sutherland,
thecurrent audit partner has held this role since
May2023 and will continue as audit partner until
theconclusion of the 2028 audit.
Johnston Carmichael LLP have confirmed that they
believe they are independent within the meaning
ofregulatory and professional requirements and
thatthe objectivity of the audit partner and staff
isnot impaired.
Having carried out the review described above,
theCommittee is satisfied that the Auditor remains
independent and effective for the purposes of this
year’s audit.
There are no contractual obligations restricting the
Committee’s choice of external Auditor.
Audit tender
Following the audit tender process conducted during
the year to 31 January 2023, the Board unanimously
decided to appoint Johnston Carmichael LLP as
Auditor with effect from the audit of the Financial
Statements for the year to 31 January 2024.
In recognition of underlying audit rotation
requirements, the Committee intends to undertake
afurther tender process during the year to
31January 2033.
Accountability and audit
The respective responsibilities of the Directors
and the Auditor in connection with the Financial
Statements are set out on pages 82 to 91.
On behalf of the Board
Kevin Troup
Audit Committee Chair
30 March 2026
Governance report
78
Annual Report and Financial Statements 2026
Directors’
remuneration report
Statement by the Chair
The Directors’ Remuneration Policy is subject
to shareholder approval every three years or
sooner if an alteration to the policy is proposed.
The Remuneration Policy which is set out below
wasapproved at the Annual General Meeting in
May 2023. No changes are proposed to the policy
and an ordinary resolution for the approval of the
Remuneration Policy will be put to the members
atthe forthcoming Annual General Meeting on
21May2026.
The Board reviewed the level of fees during the
year and it was agreed that from 1 February 2026
the Directors’ fees would increase to £31,000 from
£30,000 and the additional fee for the Chair of the
Audit Committee would increase to £6,000 from
£5,000. The fee for the Chair would be increased
to £44,500 from £43,000, and the additional fee
for the Chair ofthe Nomination Committee would
remain at £1,000. TheDirectors’ fees were last
increased on 1February2025.
Directors’ remuneration policy
The Board is composed wholly of non-executive
Directors, none of whom has a service contract
withthe Company. There is no separate remuneration
committee and the Board as a whole considers
changes to Directors’ fees from time to time.
BaillieGifford & Co Limited, the Company
Secretaries, provide comparative information when
the Board considers the level of Directors’ fees.
This report has been prepared in
accordance with the requirements
ofthe Companies Act 2006.
79
Baillie Gifford Shin Nippon PLC
The Board’s policy is that the remuneration of
Directors should be set at a reasonable level that is
commensurate with the duties and responsibilities
of the role and consistent with the requirement
to attract and retain Directors of the appropriate
quality and experience. The Board believes that
the fees paid to the Directors should reflect the
experience of the Board as a whole, be fair and
should take account of the level of fees paid by
comparable investment trusts. Any views expressed
by shareholders on the fees being paid to Directors
will be taken into consideration by the Board when
reviewing the Board’s policy on remuneration.
Non-executive Directors are not eligible for any
other remuneration or benefits apart from the
reimbursement of allowable expenses. There are
noperformance conditions relating to Directors’
feesand there are no long term incentive schemes
or pension schemes. No compensation is payable
onloss of office.
Limit on Directors’ remuneration
The fees for the non-executive Directors are payable
monthly in arrears and are determined within the
limit set out in the Company’s Articles of Association
which is currently £250,000 in aggregate. Any
change to this limit requires shareholder approval.
The basic and additional fees payable to Directors in
respect of the year ended 31 January 2026 and the
expected fees payable in respect of the year ending
31 January 2027 are set out in the following table.
The fees payable to the Directors in the subsequent
financial periods will be determined following an
annual review of the Directors’ fees.
Expected
fees for the
year ending
31 Jan 2027
£
Fees as at
31 Jan 2026
£
Chair’s fee 44,500 43,000
Non-executive Director fee 31,000 30,000
Additional fee for Chair of the
Audit Committee
6,000 5,000
Additional fee for Chair of the
Nomination Committee
1,000 1,000
Total aggregate annual fees that
can be paid to the Directors in
any year under the Directors’
Remuneration Policy, as set
out in the Company’s Articles
of Association (see ‘Limit on
Directors’ Remuneration’ above)
250,000 250,000
Annual report on remuneration
An ordinary resolution for the approval of this report
will be put to the members at the forthcoming
Annual General Meeting.
The law requires the Company’s Auditor to audit
certain of the disclosures provided in this report.
Where disclosures have been audited, they are
indicated as such. The Auditor’s opinion is included
in Johnston Carmichael LLP’s report on page 85.
Directors’ remuneration for the year (audited)
The Directors who served during the year received the following remuneration in the form of fees and
taxable benefits. This represents the entire remuneration paid to the Directors.
Name
2026
Fees
£
2026
Taxable
benefits *
£
2026
Total
£
2025
Fees
£
2025
Taxable
benefits *
£
2025
Total
£
CEC Finn 30,000 2,332 32,332 29,000 1,714 30,714
AE Rotheroe 31,000 3,547 34,547 30,000 2,047 32,047
J Skinner (Chair) 43,000 1,908 44,908 42,000 1,903 43,903
KJ Troup 35,000 1,149 36,149 34,000 927 34,927
S Vijayakumar 30,000 2,024 32,024 29,000 435 29,435
169,000 10,960 179,960 164,000 7,026 171,026
*
Comprises travel and subsistence expenses incurred by Directors in the course of travel to attend Board and Committee meetings held at the Company’s
registered office in Edinburgh. These amounts have been grossed up for income tax.
Governance report
80
Annual Report and Financial Statements 2026
Annual change in Directors’ fees (role-based)
The table below contains the annual percentage change in remuneration over the four financial years prior
to the current year in respect of the various director roles.
Fee rates:
Year to
31 January
2026
Year to
31 January
2025
Year to
31 January
2024
Year to
31 January
2023
Year to
31 January
2022
Chairman £43,000
+2.4%
£42,000
0.0%
£42,000
0.0%
£42,000
+12.0%
£37,500
0.0%
Chair of the Audit Committee £35,000
+2.9%
£34,000
+6.3%
£32,000
0.0%
£32,000
+12.3%
£28,500
0.0%
Directors £30,000
+3.4%
£29,000
+3.6%
£28,000
0.0%
£28,000
+12.0%
£25,000
0.0%
Additional fee for Chair of the Nomination
Committee
£1,000
0.0%
£1,000
0.0%
£1,000
n/a
–
–
–
–
Notes:
1. The table shows the annual change in Directors’ fees by role over the five financial years to 31 January 2026.
2. Percentage changes are calculated based on the fee applicable for each role in the relevant financial year compared to the prior year.
3. The figures shown exclude any taxable benefits and therefore reflect base Directors’ fees only.
4. The additional fee for the Chair of the Nomination Committee is shown separately and is payable in addition to the standard
Directors’ fee.
Directors’ interests (audited)
Name
Nature
of interest
Ordinary 2p
shares held
at 31 Jan
2026
Ordinary 2p
shares held
at 31 Jan
2025
CEC Finn Beneficial 10,000 10,000
AE Rotheroe Beneficial 20,189 20,189
J Skinner Beneficial 50,000 50,000
KJ Troup Beneficial 100,000 59,000
S Vijayakumar Beneficial 14,000 14,000
The Directors are not required to hold shares in the
Company. The Directors at the year end, and their
interests in the Company, were as shown above.
There have been no other changes in the Directors’
interests up to 26 March 2026.
Statement of voting at Annual General Meeting
At the last Annual General Meeting, of the proxy votes
received in respect of the Directors’ remuneration
report, 99.0% were in favour, 0.8% were against and
votes withheld were 0.2%. At the last Annual General
Meeting at which the Directors’ Remuneration Policy
was considered (May 2023), 99.2% were in favour,
0.6% were against and votes withheld were 0.2%.
Relative importance of spend on pay
The table below shows the actual expenditure during
the year in relation to Directors’ remuneration and
distributions to shareholders.
2026
£’000
2025
£’000
Change
%
Directors’ remuneration 180 171 5.3
Share buy-backs 42,137 35,219 19.6
Directors’ service details
Name
Date of
appointment
Due date for
re-election
S Vijayakumar 1 September 2018 AGM in 2026
J Skinner 7 December 2018 AGM in 2026
KJ Troup 1 March 2020 AGM in 2026
CEC Finn 1 November 2021 AGM in 2026
AE Rotheroe 1 March 2022 AGM in 2026
81
Baillie Gifford Shin Nippon PLC
Cumulative to 31 January
20262016 2018 2021 2023 20252017 20202019 2022 2024
● Baillie Gifford Shin Nippon’s
share price
*
Source: LSEG and underlying data providers. See disclaimer on page 123.
* Total return (assuming net dividends are reinvested). See Glossary of
terms and Alternative Performance Measures on pages 125 to 128.
†
The comparative index is the MSCI Japan Small Cap Index (total return
and in sterling terms). See disclaimer on page 123.
● Comparative
index
†
● FTSE All-share
index
*
0
300
200
100
Company performance
The following graph compares the total return
(assuming all dividends are reinvested) to ordinary
shareholders compared to the total shareholder
return on a notional investment made up of shares in
the component parts of the Company’s comparative
index. This index was chosen for comparison
purposes as it is the index against which the
Company has measured its performance over the
period covered by the graph. The share price total
return is also compared to the FTSE All-Share Index.
This index is a widely used measure of performance
for UK listed companies.
Performance graph
(figures have been rebased to 100 at 31 January 2016)
Past performance is not a guide to future performance.
Approval
The Directors’ remuneration report on pages78
to 81 was approved by the Board of Directors
andsigned on its behalf on 30 March2026.
Jamie Skinner
Chair
Governance report
82
Annual Report and Financial Statements 2026
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to ensure
that its Financial Statements comply with the
Companies Act 2006. They are responsible for such
internal control as they determine is necessary to
enable the preparation of Financial Statements that
are free from material misstatement, whether due
to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic report,
Directors’ report, Directors’ Remuneration report
andCorporate Governance Statement that complies
with that law and those regulations.
The Directors are responsible for ensuring the
Annual Report and the Financial Statements
aremade available on a website. The Directors
havedelegated operational responsibility to the
Managers for the maintenance and integrity of
the corporate and financial information included
on the Company’s website. Legislation in the
United Kingdom governing the preparation and
dissemination of Financial Statements may differ
from legislation in other jurisdictions.
The Directors are responsible for preparing
the Annual Report and Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
Financial Statements for each financial year. Under
that law they are required to prepare the Financial
Statements in accordance with United Kingdom
accounting standards, including FRS 102 ‘The
Financial Reporting Standard applicable in the UK
and Republic of Ireland’.
Under company law the Directors must not approve
the Financial Statements unless they are satisfied
that they give a true and fair view of the state of
affairs of the Company and of its profit or loss for
that period. In preparing these Financial Statements,
the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are
reasonable and prudent;
• state whether applicable United Kingdom
accounting standards have been followed, subject
to any material departures disclosed and explained
in the Financial Statements;
• assess the Company’s ability to continue as a
going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless
they either intend to liquidate the Company or to
cease operations, or have no realistic alternative
but to do so.
Statement of Directors’
responsibilities
in respect of the Annual Report and the Financial Statements
83
Baillie Gifford Shin Nippon PLC
Responsibility Statement of the Directors
in respect of the Annual Financial Report
We confirm that to the best of our knowledge:
• the Financial Statements which have been
prepared in accordance with the applicable set
of accounting standards, give a true and fair
view of the assets, liabilities, financial position
and net return of the Company;
• the Strategic report/Directors’ report includes a
fair review of the development and performance
of the business and the position of the Company,
together with a description of the principal
risks and uncertainties that the Company and
business faces; and
• the Annual Report and Financial Statements,
taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Company’s position and performance,
businessmodel and strategy.
On behalf of the Board
Jamie Skinner
Chair
30 March 2026
Notes
The following notes relate to financial statements published on a website and are not included in the printed
version of the Annual Report and Financial Statements:
• The maintenance and integrity of the Baillie Gifford & Co website is the responsibility of Baillie Gifford &
Co; the work carried out by the auditors does not involve consideration of these matters and accordingly,
the auditors accept no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website.
• Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Financial
report
The Financial Statements for the
year to 31 January 2026 are set
out on pages 84 to 111 and have
been prepared in accordance with
FRS102 ‘The Financial Reporting
Standard applicable in the UK
andRepublic of Ireland’.
85
Baillie Gifford Shin Nippon PLC
Independent
Auditor’s report
To the members of Baillie Gifford Shin Nippon PLC
Our approach to the audit
We planned our audit by first obtaining an
understanding of the Company and its environment,
including its key activities delegated by the Board to
relevant approved third-party service providers and
the controls over provision of those services.
We conducted our audit using information
maintained and provided by Baillie Gifford &
Co Limited (the “Investment Manager”, and the
“Company Secretaries”), the Bank of New York
Mellon (International) Limited (the “Custodian”
and the “Depositary”) and Computershare Investor
Services PLC (the “Registrar”) to whom the Company
has delegated the provision of services.
We tailored the scope of our audit to reflect our risk
assessment, taking into account such factors as
the types of investments within the Company, the
involvement of Baillie Gifford & Co, the accounting
processes and controls, and the industry in which
the Company operates.
The scope of our audit was influenced by our
application of materiality. We set certain quantitative
thresholds for materiality. These together with
qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and
extent of our audit procedures on the individual
financial statement line items and disclosures and
in the evaluation of the effect of misstatements,
both individually and in aggregate on the financial
statements as a whole.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due
to fraud) that we identified. These matters included
those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team.
Opinion
We have audited the financial statements of Baillie
Gifford Shin Nippon PLC (“the Company”), for the
year ended 31 January 2026, which comprise the
Income statement, the Balance sheet, the Statement
of changes in equity, the Cash flow statement,
and Notes to the financial statements, including
significant accounting policies. The financial
reporting framework that has been applied in their
preparation is applicable law and United Kingdom
Accounting Standards, including Financial Reporting
Standard 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland (United
Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
•
Give a true and fair view of the state of the
Company’s affairs as at 31 January 2026 and of its
net return for the year then ended;
•
Have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
•
Have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in
the Auditor responsibilities for the audit of the
financial statements section of our report. We are
independent of the Company in accordance with the
ethical requirements that are relevant to our audit
of the financial statements in the UK, including the
FRC’s Ethical Standard, as applied to listed public
interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these
requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Financial report
86
Annual Report and Financial Statements 2026
These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, we do not provide a separate opinion on these matters.
We summarise below the key audit matters in arriving at our audit opinion above, together with how our
audit addressed these matters and the results of our audit work in relation to these matters.
Key audit matter How our audit addressed the key audit matter and our conclusions
Valuation of quoted investments
(as per page 76 (Audit Committee report), page 96
(Principal accounting policies) and Note 9).
At 31 January 2026 the valuation of the quoted
investments portfolio was £404.0m.
As this is the largest component of the Company’s
Balance sheet and a key driver of the Company’s
net assets and total return, the valuation of quoted
investments has been designated as a key audit matter,
being one of the most significant assessed risks of
material misstatement due to error.
There is a further risk that investments held at fair value
may not be actively traded and the quoted prices may
not be reflective of their fair value.
We assessed controls reports provided by Baillie Gifford & Co to evaluate the
design and implementation of key controls.
We compared market prices and exchange rates applied to all quoted
investments held at 31 January 2026 to an independent third-party source
and recalculated the investment valuations.
We obtained average trading volumes from an independent third-party source
for all quoted investments held at year end and assessed their liquidity.
From our completion of these procedures, we identified no material
misstatements in relation to the valuation of quoted investments.
Valuation and ownership of unlisted investments
(as per page 76 (Audit Committee report), page 96
(Principal accounting policies) and Note 9).
At 31 January 2026 the valuation of the unlisted
investments was £7.6m.
The Company determines the fair value of unlisted
investments in accordance with the revised
International Private Equity and Venture Capital (IPEV)
valuation guidelines. Management is required to
estimate the valuation of unlisted investments, which
requires them to select an appropriate valuation method
and appropriate inputs. There is significant estimation
required, therefore this has been designated as a key
audit matter, being one of the most significant assessed
risks due to fraud or error.
Additionally, there is a risk that the Company does not
have proper legal title to the investments recorded as
held at year end.
We performed a walkthrough of the unlisted investment valuation and
ownership process to evaluate the design and implementation of key controls.
We obtained evidence of Valuation Committee and Board oversight and
approval of the unlisted investment valuations.
We evaluated the competence, capabilities and objectivity of S&P Global in
their role as the Managers’ expert.
We tested 100% of the unlisted investments and as part of our procedures
have assessed the Directors’ estimate of the fair value of the unlisted
investments with reference to IPEV guidelines.
For 100% of unlisted investments held, we:
•
Obtained an understanding of the sector for each investee company for the
period being audited, making enquiries of the Managers;
•
Gained an understanding of the original investment rationale and valuation
basis, along with any milestones set;
•
Obtained an update on the investment, paying particular attention to
progress against pre-set milestones and/or indications that a reduction in
valuation may be appropriate;
•
Assessed the appropriateness of the valuation basis used, paying
particular attention to any changes from the prior year valuation basis;
•
Agreed data used in the valuation models to independent sources and
assessed how management get comfortable with the accuracy and
reliability of investee company information;
•
Reperformed the enterprise value calculations and waterfalls to ensure
mathematical accuracy; and
•
Where appropriate, developed an auditor’s point estimate or range.
We performed back-testing over investment disposals to assess for potential
management bias in the valuation process.
We tested the Moneytree K.K. disposal and agreed it to the sales and
purchase agreement.
We agreed 100% of unlisted investments held at year end via direct email
confirmation from the investee companies.
We assessed whether the accounting for the investments and the
disclosures in relation to valuation estimates within the financial statements
were in accordance with accounting policies, the AIC SORP and FRS102
requirements.
From our completion of these procedures, we identified no material
misstatements in relation to the valuation and ownership of the unlisted
investments.
87
Baillie Gifford Shin Nippon PLC
Key audit matter How our audit addressed the key audit matter and our conclusions
Revenue recognition, including allocation of special
dividends as revenue or capital returns
(as per page 97 (Principal accounting policies) and
Note2).
Investment income recognised up to 31 January 2026
amounted to £7.1m, consisting primarily of dividend income
from quoted investments.
Revenue-based performance metrics are often one of
the key performance indicators for stakeholders. The
investment income received by the Company during the
year directly impacts these metrics and the minimum
dividend required to be paid by the Company.
There is a risk that revenue is incomplete, did not occur
or is inaccurate through failure to recognise income
entitlements or failure to appropriately account for their
treatment. It has therefore been designated a key audit
matter, being one of the most significant assessed risks of
material misstatement due to error.
Additionally, there is a fraud risk of incorrect allocation
of special dividends as revenue or capital returns, as
judgement is required in determining their allocation within
the Income Statement.
We assessed controls reports provided by Baillie Gifford & Co to evaluate the
design and implementation of key controls.
We assessed whether income was recognised and disclosed in accordance
with the financial reporting framework, including the AIC SORP and the
Company’s accounting policies.
We recalculated 100% of dividends due to the Company from quoted
investments based on investment holdings throughout the year and
announcements made by investee companies.
We agreed a sample of dividends received to bank statements.
We compared exchange rates applied to all overseas dividends received from
the investee companies during the year to an independent third-party source.
We assessed the completeness of the special dividend population with
reference to third-party market data and assessed management’s judgement
for allocating special dividends as revenue or capital returns with reference to
the underlying commercial circumstances of dividend payments.
From our completion of these procedures, we identified no material
misstatements in relation to revenue recognition, including allocation of
special dividends as revenue or capital returns.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality in determining the nature and extent of our work and in evaluating the results of that work.
Materiality measure Value
Materiality for the financial statements as a whole
We have set materiality as 1% of net assets as we
believe that net assets is the primary performance
measure used by investors and is the key driver of
shareholder value. We determined the measurement
percentage to be commensurate with the risk and
complexity of the audit and the Company’s listed
status.
£3.59m
(2025:
£3.90m)
Performance materiality
Performance materiality represents amounts set by
the auditor at less than materiality for the financial
statements as a whole, to reduce to an appropriately
low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole.
In setting this we consider the Company’s overall
control environment, our past experience of the audit
that indicates a lower risk of material misstatements.
Based on our judgement of these factors, we have
set performance materiality at 75% of our overall
financial statement materiality.
£2.69m
(2025:
£2.92m)
Materiality measure Value
Specific materiality
Recognising that there are transactions and
balancesof a lesser amount which could influence
the understanding of users of the financial statements
we calculate a lower level of materiality for testing
such areas.
Specifically, given the importance of the distinction
between revenue and capital for the Company, we
also applied a separate testing threshold for the
revenue column of the Income statement, set at our
Audit Committee reporting threshold.
We have set a specific materiality in respect of related
party transactions and Directors’ remuneration.
We used our judgement in setting these thresholds
and considered our past experience of the audit, the
history of misstatements and industry benchmarks for
specific materiality.
£0.18m
(2025:
£0.19m)
Audit Committee reporting threshold
We agreed with the Audit Committee that we would
report to them all differences in excess of 5% of overall
materiality in addition to other identified misstatements
that warranted reporting on qualitative grounds, in our
view. For example, an immaterial misstatement as a
result of fraud.
£0.18m
(2025:
£0.19m)
During the course of the audit, we reassessed initial materiality and found no reason to alter the basis of
calculation used at year-end.
Financial report
88
Annual Report and Financial Statements 2026
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the
Company’s ability to continue to adopt the going
concern basis of accounting included:
•
Evaluating management’s method of assessing
going concern, including consideration of the
Tender Offer held in February 2026, bank loans,
and market conditions and macro-economic
uncertainties;
•
Assessing and challenging the forecast cashflows
and associated sensitivity modelling, including
assessing the loan covenants used by the
Directors in support of their going concern
assessment;
•
Obtaining and recalculating management’s
assessment of the Company’s ongoing
maintenance of investment trust status; and
•
Assessing the adequacy of the Company’s going
concern disclosures included in the Annual
Report.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the Company’s
ability to continue as a going concern for a period
of at least twelve months from when the financial
statements are authorised for issue.
In relation to the Company’s reporting on how it has
applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in
relation to the Directors’ statement in the financial
statements about whether the Directors considered
it appropriate to adopt the going concern basis
ofaccounting.
Our responsibilities and the responsibilities of
the Directors with respect to going concern are
described in the relevant sections of this report.
Other information
The other information comprises the information
included in the Annual Report and Financial
Statements other than the Financial Statements
and our auditor’s report thereon. The Directors are
responsible for the other information contained
within the Annual Report. Our opinion on the
financial statements does not cover the other
information and, except to the extent otherwise
explicitly stated in our report, we do not express
any form of assurance conclusion thereon. Our
responsibility is to read the other information
and, in doing so, consider whether the other
information is materially inconsistent with the
financial statements or our knowledge obtained in
the course of the audit, or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives
rise to a material misstatement in the financial
statements themselves. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
•
The information given in the Strategic Report
and the Directors’ Report for the financial year
for which the financial statements are prepared is
consistent with the financial statements; and
•
The Strategic Report and the Directors’ Report
have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of
the Company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
Adequate accounting records have not been kept
by the Company, or returns adequate for our audit
have not been received from branches not visited
by us; or
89
Baillie Gifford Shin Nippon PLC
•
The financial statements and the part of the
Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and
returns; or
•
Certain disclosures of Directors’ remuneration
specified by law are not made; or
•
We have not received all the information and
explanations we require for our audit; or
•
A corporate governance statement has not been
prepared by the Company.
Corporate governance statement
We have reviewed the Directors’ statement in
relation to going concern, longer-term viability and
that part of the Corporate Governance Statement
relating to the entity’s compliance with the
provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit,
we have concluded that each of the following
elements of the Corporate Governance Statement is
materially consistent with the financial statements or
our knowledge obtained during the audit:
•
The Directors’ statement with regards to the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on page 73;
•
The Directors’ explanation as to its assessment
of the Company’s prospects, the period this
assessment covers and why the period is
appropriate set out on page 53;
•
The Directors’ statement on fair, balanced and
understandable set out on page 83;
•
The Directors’ statement on whether it has a
reasonable expectation that the Company will
be able to continue in operation and meets its
liabilities set out on page 53;
•
The Board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on page 49 to 55;
•
The section of the Annual Report that
describes the review of the effectiveness of risk
management and internal control systems set out
on pages 72 and 73; and
•
The section describing the work of the Audit
Committee set out on pages 75 to 77.
Responsibilities of Directors
As explained more fully in the Directors’
Responsibilities Statement set out on pages 82
and 83, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for
such internal control as the Directors determine is
necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error. In preparing the
financial statements, the Directors are responsible
for assessing the Company’s ability to continue as
a going concern, disclosing, as applicable, matters
related to going concern and using the going concern
basis of accounting unless the Directors either intend
to liquidate the Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for
the audit of the financial statements is located
on the Financial Reporting Council’s website at:
http://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Extent to which the audit was considered capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
Financial report
90
Annual Report and Financial Statements 2026
We assessed whether the engagement team
collectively had the appropriate competence and
capabilities to identify or recognise non-compliance
with laws and regulations by considering their
experience, past performance and support available.
All engagement team members were briefed
on relevant identified laws and regulations and
potential fraud risks at the planning stage of the
audit. Engagement team members were reminded
to remain alert to any indications of fraud or non-
compliance with laws and regulations throughout
the audit.
We obtained an understanding of the legal and
regulatory frameworks that are applicable to the
Company and the sector in which it operates,
focusing on those provisions that had a direct effect
on the determination of material amounts and
disclosures in the financial statements. The most
relevant frameworks we identified include:
•
Companies Act 2006;
• Financial Conduct Authority (FCA) listing and
Disclosure Guidance and Transparency Rules
(DTR);
•
The principles of the UK Corporate Governance
Code applied by the 2024 AIC Corporate
Governance Code (the “AIC Code”);
•
Industry practice represented by the Statement of
Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital
Trusts (“the SORP”) issued in July 2022;
•
The Company’s qualification as an investment
trusts under section 1158 of the Corporation Tax
Act 2010; and
•
UK Generally Accepted Accounting Practice.
We gained an understanding of how the Company
is complying with these laws and regulations by
making enquiries of management and those charged
with governance. We corroborated these enquiries
through our review of relevant correspondence with
regulatory bodies and board meeting minutes.
We assessed the susceptibility of the financial
statements to material misstatement, including how
fraud might occur, by meeting with management
and those charged with governance to understand
where it was considered there was susceptibility
to fraud. This evaluation also considered how
management and those charged with governance
were remunerated and whether this provided an
incentive for fraudulent activity. We considered the
overall control environment and how management
and those charged with governance oversee the
implementation and operation of controls. In areas
of the financial statements where the risks were
considered to be higher, we performed procedures
to address each identified risk. We identified a
heightened fraud risk in relation to:
•
Management override of controls;
• Valuation of unlisted investments; and
• Allocation of special dividends.
Audit procedures performed in response to the
heightened fraud risks relating to valuation of unlisted
investments and allocation of special dividends are
set out in the section on key audit matters above, and
audit procedures performed in response to the risk of
management override of controls are included below.
In addition to the above, the following procedures
were performed to provide reasonable assurance that
the financial statements were free of material fraud
orerror:
•
Reviewing minutes of meetings of those charged
with governance for reference to: breaches
of laws and regulation or for any indication of
any potential litigation and claims; and events
or conditions that could indicate an incentive
or pressure to commit fraud or provide an
opportunity to commit fraud;
•
Reviewing the level of and reasoning behind the
Company’s procurement of legal and professional
services;
•
Performing audit procedures over the risk of
management override of controls, including
testing of journal entries and other adjustments
for appropriateness, performing unpredictability
testing, recalculating the investment management
fee, evaluating the business rationale of
significant transactions outside the normal course
of business and assessing judgements made by
management in their calculation of accounting
estimates for potential management bias;
•
Completion of appropriate checklists and use
of our experience to assess the Company’s
compliance with the Companies Act 2006 and the
Listing Rules; and
•
Agreement of the financial statement disclosures
to supporting documentation.
91
Baillie Gifford Shin Nippon PLC
Our audit procedures were designed to respond to
the risk of material misstatements in the financial
statements, recognising that the risk of not detecting
a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as
fraud may involve intentional concealment, forgery,
collusion, omission or misrepresentation. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws
and regulations is from the events and transactions
reflected in the financial statements, the less likely we
would become aware of it.
Other matters which we are required
toaddress
Following the recommendation of the Audit
Committee, we were appointed by the Board on
17 May 2023 to audit the financial statements for
the year ended 31 January 2024 and subsequent
financial years. The period of our total uninterrupted
engagement is three years, covering the years
ended 31 January 2024 to 31 January 2026.
The non-audit services prohibited by the FRC’s
Ethical Standard were not provided to the Company
and we remain independent of the Company in
conducting our audit.
Our audit opinion is consistent with the additional
report to the Audit Committee.
Use of our report
This report is made solely to the Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the Company’s members those matters we are
required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s
members as a body, for our audit work, for this
report, or for the opinions we have formed.
Richard Sutherland (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
Statutory Auditor
Edinburgh
United Kingdom
30 March 2026
Financial report
92
Annual Report and Financial Statements 2026
For the year ended 31 January
Notes
2026
Revenue
£’000
2026
Capital
£’000
2026
Total
£’000
2025
Revenue
£’000
2025
Capital
£’000
2025
Total
£’000
Gains/(losses) on investments 9 – 5,584 5,584 – (34,865) (34,865)
Currency gains 13 – 5,321 5,321 – 2,415 2,415
Income 2 7,052 – 7,052 7,389 – 7,389
Investment management fee 3 (2,270) – (2,270) (2,482) – (2,482)
Other administrative expenses 4 (889) – (889) (714) – (714)
Net return before finance costs
and taxation
3,893 10,905 14,798 4,193 (32,450) (28,257)
Finance costs of borrowings 5 (1,208) – (1,208) (1,465) – (1,465)
Net return before taxation 2,685 10,905 13,590 2,728 (32,450) (29,722)
Tax on ordinary activities
6
(704) – (704) (739) – (739)
Net return after taxation 1,981 10,905 12,886 1,989 (32,450) (30,461)
Net return per ordinary share 7 0.77p 4.22p 4.99p 0.67p (10.97p) (10.30p)
Note: Dividends per share payable
and paid in respect of the year
8 0.69p 0.60p
The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared
under guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing operations.
A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.
The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements.
Income
statement
93
Baillie Gifford Shin Nippon PLC
As at 31 January
Notes
2026
£’000
2026
£’000
2025
£’000
2025
£’000
Fixed assets
Investments held at fair value through profit or loss 9 411,604 453,211
Current assets
Debtors 10 2,427 1,989
Cash at bank 18 16,689 20,797
19,116 22,786
Creditors
Amounts falling due within one year 11 (71,897) (86,307)
Net current liabilities (52,781) (63,521)
Net assets 358,823 389,690
Capital and reserves
Share capital 12 6,285 6,285
Share premium account 13 – 260,270
Distributable capital reserve 13 260,270 –
Capital redemption reserve 13 21,521 21,521
Capital reserve 13 68,213 99,445
Revenue reserve 13 2,534 2,169
Shareholders’ funds 358,823 389,690
Net asset value per ordinary share* 14 146.3p 139.4p
The Financial Statements of Baillie Gifford Shin Nippon PLC (Company Registration Number SC093345)
onpages 92 to 111 were approved and authorised for issue by the Board and were signed on its behalf on
30March 2026.
Jamie Skinner
Chair
* See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements.
Balance
sheet
Financial report
94
Annual Report and Financial Statements 2026
For the year ended 31 January 2026
Notes
Share
capital
£’000
Share
premium
account
£’000
Distributable
capital
reserve
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
Shareholders’ funds at 1 February 2025 6,285 260,270 – 21,521 99,445 2,169 389,690
Ordinary shares bought back into treasury 12 – – – – (42,137) – (42,137)
Cancellation of share premium account – (260,270) 260,270 – – – –
Net return on ordinary activities after
taxation
7 – – – – 10,905 1,981 12,886
Dividend paid in the year 8 – – – – – (1,616) (1,616)
Shareholders’ funds at 31 January 2026 6,285 – 260,270 21,521 68,213 2,534 358,823
For the year ended 31 January 2025
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
Shareholders’ funds at 1 February 2024 6,285 260,270 21,521 167,114 2,602 457,792
Ordinary shares bought back into treasury 12 – – – (35,219) – (35,219)
Net return on ordinary activities after
taxation
7 – – – (32,450) 1,989 (30,461)
Dividend paid in the period 8 – – – – (2,422) (2,422)
Shareholders’ funds at 31 January 2025 6,285 260,270 21,521 99,445 2,169 389,690
The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements.
Statement of
changes in equity
95
Baillie Gifford Shin Nippon PLC
The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements.
For the year ended 31 January
Notes
2026
£’000
2026
£’000
2025
£’000
2025
£’000
Cash flows from operating activities
Net return/(loss) on ordinary activities before taxation 13,590 (29,722)
Net (gains)/losses on investments (5,584) 34,865
Currency gains (5,321) (2,415)
Finance costs of borrowings 1,208 1,465
Overseas withholding tax (709) (805)
Decrease in debtors, accrued income and prepaid expenses 55 638
Increase/(decrease) in creditors 149 (402)
Cash inflow from operations 3,388 3,624
Interest paid (1,384) (1,460)
Net cash inflow from operating activities 2,004 2,164
Cash flows from investing activities
Acquisitions of investments (96,423) (112,102)
Disposals of investments 142,314 165,814
Net cash inflow from investing activities 45,891 53,712
Ordinary shares bought back into treasury and stamp duty thereon 12 (42,137) (35,219)
Bank loans repaid (456,693) (35,907)
Bank loans drawn down 449,990 35,907
Net cash (outflow) from financing activities (48,840) (35,219)
Dividends paid 8 (1,616) (2,422)
(Decrease)/increase in cash and cash equivalents (2,561) 18,235
Exchange movements (1,547) (403)
Cash and cash equivalents at 1 February 18 20,797 2,965
Cash and cash equivalents at 31 January* 18 16,689 20,797
*
Cash and cash equivalents represent cash at bank and deposits repayable on demand.
Cash flow
statement
Financial report
96
Annual Report and Financial Statements 2026
01 Principal accounting policies
The Financial Statements for the year to 31 January 2026
have been prepared in accordance with FRS 102 ‘The
Financial Reporting Standard applicable in the UK and
Republic of Ireland’ on the basis of the accounting policies
set out below which are unchanged from the prior year and
have been applied consistently.
a. Basis of accounting
All of the Company’s operations are of a continuing
nature and the Financial Statements are prepared on a
going concern basis under the historical cost convention,
modified to include the revaluation of fixed asset
investments at fair value through profit or loss, and on the
assumption that approval as an investment trust under
section 1158 of the Corporation Tax Act 2010 and the
Investment Trust (Approved Company) (Tax) Regulations
2011 will be retained. The Board has, in particular,
considered the impact of heightened market volatility
and reviewed the results of specific leverage and liquidity
stress testing, but does not believe the Company’s going
concern status is affected. The Company’s assets, which
are primarily investments in quoted securities and are
readily realisable (Level 1) exceed its liabilities significantly
and could be sold to repay borrowings if required.
All borrowings require the prior approval of the Board.
Gearing levels and compliance with loan covenants
arereviewed by the Board on a regular basis. As at
31January 2026, the Company had a net current
liabilityof £52.8 million primarily as a result of the
revolving credit facility which is repayable on a
threemonthly basis although does not mature until 2027.
The Company has continued to comply with the
investment trust status requirements of section 1158 of
the Corporation Tax Act 2010 and the Investment Trust
(Approved Company) Regulations 2011.
Accordingly, the Financial Statements have been
prepared on the going concern basis as it is the Directors’
opinion, having assessed the principal and emerging risks
and other matters, as set out in the Viability Statement on
page 53, that the Company will continue in operational
existence for a period of at least twelve months from the
date of approval of these Financial Statements.
The Financial Statements have been prepared in
accordance with the Companies Act 2006, applicable
United Kingdom Accounting Standards and with the
AIC’s Statement of Recommended Practice ‘Financial
Statements of Investment Trust Companies and Venture
Capital Trusts’ issued in November 2014 and updated in
July 2022 with consequential amendments.
In order to reflect better the activities of the Company
and in accordance with guidance issued by the AIC,
supplementary information which analyses the profit
and loss account between items of a revenue and capital
nature has been presented in the Income statement.
The Company has only one material segment being that
of an investment trust company, investing principally in
small Japanese companies.
Financial assets and financial liabilities are recognised in
the Company’s Balance sheet when it becomes a party
tothe contractual provisions of the instrument.
The Directors consider the Company’s functional
currency to be sterling as the Company’s shareholders
are predominantly based in the UK, and the Company
and its investment manager, who are subject to the UK’s
regulatory environment are also UK based.
b. Investments
Purchases and sales
Purchases and sales of investments are accounted for
on a trade date basis. All investments are designated
as valued at fair value through profit or loss upon initial
recognition and are measured at subsequent reporting
dates at fair value.
Listed investments
The fair value of listed security investments is bid value
or, in the case of holdings on certain recognised overseas
exchanges, at last traded prices.
Private company investments
Private company investments are valued at fair value by
the Directors following a detailed review and appropriate
challenge of the valuations proposed by the Managers.
The Managers’ private company investment policy applies
techniques consistent with the International Private Equity
and Venture Capital Valuation Guidelines 2025 (‘IPEV’).
The techniques applied are predominantly market-based
approaches. The market-based approaches available
under IPEV are set out below and are followed by an
explanation of how they are applied to the Company’s
private company portfolio:
• Multiples;
• Industry valuation benchmarks; and
• Available market prices.
The nature of the private company portfolio currently
will influence the valuation technique applied. The
valuation approach recognises that, as stated in the
IPEV Guidelines, the price of a recent investment,
Notes to the
Financial Statements
97
Baillie Gifford Shin Nippon PLC
if resulting from an orderly transaction, generally
represents fair value as at the transaction date and
may be an appropriate starting point for estimating fair
value at subsequent measurement dates. However,
consideration is given to the facts and circumstances
as at the subsequent measurement date, including
changes in the market or performance of the investee
company. Milestone analysis is used where appropriate
to incorporate the operational progress of the investee
company into the valuation. Additionally, the background
to the transaction must be considered. As a result,
various multiples-based techniques are employed to
assess the valuations particularly in those companies with
established revenues. Discounted cashflows are used
where appropriate. An absence of relevant industry peers
may preclude the application of the Industry Valuation
Benchmarks technique and an absence of observable
prices may preclude the Available Market Prices approach.
All valuations are cross-checked for reasonableness by
employing relevant alternativetechniques.
The private company investments are valued according
to a three monthly cycle of measurement dates. The fair
value of the private company investments will be reviewed
before the next scheduled three monthly measurement
date on the following occasions:
• at the year end and half year end of the Company; and
• where there is an indication of a change in fair value as
defined in the IPEV guidelines (commonly referred to as
‘trigger’ events).
Gains and losses
Gains and losses on investments are recognised in the
Income statement as capital items. Gain and losses
arising from foreign exchange differences are recognised
in the Income statement and classified as a revenue or
capital item as appropriate.
c. Cash and cash equivalents
Cash and cash equivalents include cash in hand and
deposits repayable on demand. Deposits are repayable
on demand if they can be withdrawn at any time without
notice and without penalty or if they have a maturity or
period of notice of not more than one working day.
d. Income
i. Income from equity investments is brought into account
on the date on which the investments are quoted ex-
dividend or, where no ex-dividend date is quoted, when
the Company’s right to receive payment is established.
ii. Interest from fixed interest securities is recognised on
an effective yield basis.
iii. Overseas dividends include withholding tax deducted
atsource.
iv. Interest receivable on bank deposits are recognised on
an accruals basis.
v. If scrip is taken in lieu of dividends in cash, the net
amount of the equivalent cash dividend is credited to
the revenue account. Any excess in the value of the
shares received over the amount of the cash dividend
foregone is recognised as capital.
e. Expenses
All expenses are accounted for on an accruals basis
and are charged to the revenue account except where
they relate directly to the acquisition or disposal of an
investment, in which case they are added to the cost
of the investment or deducted from the sale proceeds.
Expenses directly relating to the issuance of shares are
deducted from the proceeds of such issuance.
f. Finance costs
Long term borrowings are carried in the Balance sheet
at amortised cost, representing the cumulative amount
of net proceeds after issue, plus accrued finance costs.
The finance costs of such borrowings are allocated to
the revenue account at a constant rate on the carrying
amount.
Gains and losses on the repurchase or early settlement
ofdebt are wholly charged to capital.
g. Taxation
Current tax is provided at the amounts expected to be
paid or recovered. Deferred taxation is provided on an
undiscounted basis on all timing differences which have
originated but not reversed by the Balance sheet date,
calculated at the tax rates expected to apply when the
timing differences reverse, based on what has been
enacted or substantially enacted, relevant to the benefit
or liability. Deferred tax assets are recognised only to
the extent that it is more likely than not that there will be
taxable profits from which underlying timing differences
can be deducted.
h. Dividends payable
Dividends are not recognised in the Financial Statements
unless there is an obligation to pay at the Balance
sheetdate.
Financial report
98
Annual Report and Financial Statements 2026
i. Foreign currencies
Transactions involving foreign currencies are converted
at the rate ruling at the time of the transaction. Monetary
assets, liabilities and equity investments held at fair value
in foreign currencies are translated at the closing rates of
exchange at the Balance sheet date, with the exception
of forward foreign exchange contracts which are valued
at the forward rate ruling at the Balance sheet date.
Any gain or loss arising from a change in exchange rate
subsequent to the date of the transaction is included as
an exchange gain or loss in the Income statement and
classified as a revenue or capital item as appropriate.
j. Share premium account
During the year, the Company obtained court approval
to cancel the share premium account. The balance
previously recognised in the share premium account
was transferred to a newly created distributable capital
reserve.
k. Distributable capital reserve
Following court approval during the year, a distributable
capital reserve was created through the cancellation
of the Company’s share premium account. The reserve
represents the amount previously held in the share
premium account and is available for distribution and to
fund the repurchase of the Company’s own shares.
l
. Capital reserve
Gains and losses on disposal of investments, changes in
the fair value of investments held, exchange differences
of a capital nature and the amount by which other assets
and liabilities valued at fair value differ from their book
cost are dealt with in this reserve. Purchases of the
Company’s own shares are also funded from this reserve.
The capital reserve, to the extent it constitutes realised
profits, is distributable.
m.
Capital redemption reserve
The nominal value of ordinary share capital repurchased
and cancelled is transferred out of the called-up share
capital and into the capital redemption reserve.
n
. Revenue reserve
The revenue profit or loss for the year is taken to or from
this reserve. The revenue reserve when in surplus may be
distributed by way of a dividend.
o
. Single segment reporting
The Company is engaged in a single segment of business,
being investment business, consequently no business
segmental analysis is provided.
p
. Significant accounting estimates and judgements
The preparation of the Financial Statements requires
the use of estimates, assumptions and judgements.
These estimates, assumptions and judgements affect
the reported amounts of assets and liabilities, at the
reporting date. While estimates are based on best
judgement using information and financial data available,
the actual outcome may differ from these estimates. The
key sources of estimation and uncertainty relate to the
assumptions used in the determination of the fair value
ofthe unlisted investments, which are detailed in note 9
on pages 101 and 102.
Judgements
The Directors consider that the preparation of the
Financial Statements involves the following key
judgements: (i) the determination of the functional
currency of the Company as sterling (see rationale in
1(a) above); and (ii) the fair valuation of the unlisted
investments. The key judgements in the fair valuation
process are: (i) the Managers’ determination of the
appropriate application of the International Private Equity
and Venture Capital Guidelines 2025 (‘IPEV’) to each
unlisted investment; and (ii) the Directors’ consideration
ofwhether each fair value is appropriate following
detailed review and challenge. The judgement applied
inthe selection of the methodology used for determining
the fair value of each unlisted investment can have a
significant impact upon the valuation.
Estimates
The key estimate in the Financial Statements is the
determination of the fair value of the unlisted investments
by the Managers for consideration by the Directors. This
estimate is key as it significantly impacts the valuation
of the unlisted investments at the Balance sheet date.
The significance of this estimate has remained broadly
unchanged over the year with the marginal decrease in
private company investments from 1.9% of total assets
to 1.8% (see note 9). The fair valuation process involves
estimation using subjective inputs that are unobservable
(for which market data is unavailable). The main estimates
involved in the selection of the valuation process inputs
are:
i. the selection of appropriate comparable companies
in order to derive revenue multiples and meaningful
relationships between enterprise value, revenue and
earnings growth. Comparable companies are chosen
onthe basis of their business characteristics and
growth patterns;
ii. the selection of a revenue metric (either historic or
forecast);
iii. the application of an appropriate discount factor to
reflect the reduced liquidity of unlisted companies
versus their quoted peers;
iv. the estimation of the probability assigned to an exit
being through an initial public offering (‘IPO’) or a
company sale;
v. the selection of an appropriate industry benchmark
index to assist with the valuation validation or the
application of valuation adjustments, particularly in the
absence of established earnings or closely comparable
peers; and
vi. the calculation of valuation adjustments derived from
milestone analysis (i.e. incorporating operational
success against the plan/forecasts of the business
intothe valuation).
Fair value estimates are cross-checked to alternative
estimation methods where possible to improve the
robustness of the estimates. The risk of an over or under
estimation of fair values is greater when methodologies
are applied using more subjective inputs.
99
Baillie Gifford Shin Nippon PLC
02 Income
2026
£’000
2025
£’000
Income from investments
Listed overseas dividends 7,052 7,387
Other income
Deposit interest – 2
Total income 7,052 7,389
Total income comprises
Dividends from financial assets designated at fair value through profit or loss 7,052 7,387
Interest from financial assets not at fair value through profit or loss – 2
Total income 7,052 7,389
03 Investment management fee – all charged to revenue
2026
£’000
2025
£’000
Investment management fee 2,270 2,482
Details of the Investment Management Agreement are set out on page 63. Baillie Gifford & Co Limited’s annual management fee
is 0.75% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remainder.
With effect from 1 February 2026, the annual management fee is 0.65% on the first £250m of net assets and 0.55% on the
remaining net assets.
04 Other administrative expenses
2026
£’000
2025
£’000
General administrative expenses 423* 294
Directors’ fees (see Directors’ remuneration report on pages 78 to 81) 169 164
Auditor’s remuneration (statutory audit of the Company’s Financial Statements) 43 42
Custody fees 49 49
Depositary fees 41 45
Registrar fees 67 23
Marketing expenses
†
97 97
889 714
* General administrative expenses for the year to 31 January 2026 increased primarily due to higher professional fees associated with corporate
activities undertaken during the period.
†
The Company is part of a marketing programme which includes all the investment trusts managed by the Managers. The marketing strategy has
an ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy is borne, in partnership, by the Company
and the Managers. The Managers match the Company’s marketing contribution and provide the resource to manage and run the programme.
05 Finance costs of borrowings
2026
£’000
2025
£’000
Interest on bank loans 1,208 1,465
The bank loan interest disclosed includes £0 paid (2025 – £9,000) in respect of yen deposits held at the custodian bank.
Financial report
100
Annual Report and Financial Statements 2026
06 Tax on ordinary activities
2026
£’000
2025
£’000
Analysis of charge in year
Overseas taxation (charged to revenue) 704 739
Factors affecting tax charge for year
The tax assessed for the year is lower than the average standard rate of corporation tax
in the UK of 25%*. The differences are explained below:
Net gain/(loss) on ordinary activities before taxation 13,590 (29,722)
Net return on ordinary activities multiplied by the standard rate of corporation tax in the
UK of 25%* (2025 – 25%)
3,398 (7,431)
Effects of:
Capital returns not taxable (2,726) 8,112
Income not taxable (1,763) (1,846)
Overseas withholding tax 704 739
Taxable losses in year not utilised 1,091 1,165
Total tax charge for the year 704 739
* A tax rate of 25% reflects the UK corporation tax rate of 25% effective from 1 April 2023.
As an investment trust, the Company’s capital gains are not subject to tax.
At 31 January 2026 the Company had a potential deferred tax asset of £13,478,000 (2025 – £13,551,000) on tax losses which
are available to be carried forward and offset against future taxable profits. A deferred tax asset has not been recognised on these
losses as it is considered unlikely that the Company will generate taxable profits in the future and it is not liable to tax on its
capital gains. The unrecognised deferred tax asset has been calculated using a corporation tax rate of 25% (2025 – 25%).
Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to retain
approval for the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on
therevaluation or disposal of investments.
07 Net return per ordinary share
2026
Revenue
2026
Capital
2026
Total
2025
Revenue
2025
Capital
2025
Total
Net return on ordinary activities after
taxation
0.77p 4.22p 4.99p 0.67p (10.97p) (10.30p)
Revenue return per ordinary share is based on the net revenue gain on ordinary activities after taxation of £1,981,000 (2025 –
gain of £1,989,000) and on 258,475,084 ordinary shares (2025 – 295,693,208) being the weighted average number of ordinary
shares in issue during the year.
Capital return per ordinary share is based on the net capital gain for the financial year of £10,905,000 (2025 – net capital loss of
£32,450,000) and on 258,475,084 ordinary shares (2025 – 295,693,208) being the weighted average number of ordinary shares
in issue during the year.
There are no dilutive or potentially dilutive shares in issue.
101
Baillie Gifford Shin Nippon PLC
08 Ordinary dividends
2026
p
2025
p
2026
£’000
2025
£’000
Amounts recognised as distributions in the year:
Previous year's final dividend (paid 29 May 2025) 0.60p 0.80p 1,616 2,422
We set out below the total dividends proposed in respect of the financial year, which is the basis on which the requirements
of section 1158 of the Corporation Tax Act 2010 are considered. There is a revenue surplus for the year to 31 January 2026 of
£1,981,000 which is available for distribution by way of a dividend payment (year to 2025 – a revenue surplus of £1,989,000).
2026
p
2025
p
2026
£’000
2025
£’000
Amounts paid and payable in respect of the financial year:
Proposed final dividend per ordinary share (payable 26 May 2026) 0.69p 0.60p 1,693 1,677
09 Fixed assets – investments
As at 31 January 2026
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Quoted equities 404,032 – – 404,032
Unlisted securities – – 7,572 7,572
Total financial asset investments 404,032 – 7,572 411,604
As at 31 January 2025
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Quoted equities 444,025 – – 444,025
Unlisted securities – – 9,186 9,186
Total financial asset investments 444,025 – 9,186 453,211
Investments in securities are financial assets designated at fair value through profit or loss. In accordance with Financial
Reporting Standard 102, the tables provide an analysis of these investments based on the fair value hierarchy described below,
which reflects the reliability and significance of the information used to measure their fair value.
Fair value hierarchy
The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the
profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level
input that is significant to the fair value measurement.
Level 1
– using unadjusted quoted prices for identical instruments in an active market;
Level 2 – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on
marketdata); and
Level 3
– using inputs that are unobservable (for which market data is unavailable).
The valuation techniques used by the Company are explained in the accounting policies on pages 96 and 97.
Unlisted securities are categorised as Level 3. None of the financial liabilities are designated at fair value through profit or loss
inthe Financial Statements.
Financial report
102
Annual Report and Financial Statements 2026
09 Fixed assets – investments (continued)
Fair value hierarchy (continued)
Quoted
securities
£’000
Unlisted
securities
£’000
†
2026
Total
£’000
2025
Total
£’000
Cost of investments at 1 February 2025 449,357 20,141 469,498 563,548
Investment holding losses at 1 February 2025 (5,332) (10,955) (16,287) (23,847)
Value of investments at 1 February 2025 444,025 9,186 453,211 539,701
Analysis of transactions during the year:
Purchases at cost 95,611 – 95,611 113,229
Sales proceeds received (140,274) (2,528) (142,802) (164,854)
Realised (losses)/gains on investments (3,504) 877 (2,627) (42,425)
Movement in unrealised appreciation 8,174 37 8,211 7,560
Fair value of investments held at 31 January 2026 404,032 7,572 411,604 453,211
Cost of investments held at 31 January 2026 401,190 18,490 419,680 469,498
Investment holding losses at 31 January 2026 2,842 (10,918) (8,076) (16,287)
Fair value of investments held at 31 January 2026 404,032 7,572 411,604 453,211
†
The unlisted security investments include holdings of ordinary shares in Gojo & Company, Spiber and JEPLAN.
The company received £142,802,000 (2025 – £164,854,000) from investments sold in the year. The book cost of these
investments when they were purchased was £145,430,000 (2025 – £207,279,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
Transaction costs of £48,000 (2025 – £48,000) and £113,000 (2025 – £49,000) were suffered on purchases and sales respectively.
2026
£’000
2025
£’000
Gains/(losses) on investments
Losses on sales (2,627) (42,425)
Changes in investment holding gain 8,211 7,560
5,584 (34,865)
The loss on sales of £2,627,000 (2025 – £42,425,000) and increase in investment holding gains of £8,211,000 (2025 –
£7,560,000) include amounts relating to:
i) changes in local currency fair value of the investments; and, ii) movements in the yen/sterling exchange rate.
10 Debtors
2026
£’000
2025
£’000
Accrued income 1,605 1,652
Sales for subsequent settlement 684 196
Other debtors and prepayments 138 141
2,427 1,989
The debtors above are stated at amortised cost which is a reasonable approximation to fair value.
103
Baillie Gifford Shin Nippon PLC
11 Creditors – amounts falling due within one year
2026
£’000
2025
£’000
Purchases for subsequent settlement 840 1,652
ING Bank N.V revolving loan – 46,775
Bank of America revolving loan 70,105 36,901
Other creditors and accruals 952 979
71,897 86,307
Included in creditors is £568,000 (2025 – £611,000) in respect of the investment management fee.
The creditors above are stated at amortised cost which is a reasonable approximation to fair value.
Amortisation of the loan arrangement fees during the year was £nil (2025 – £19,000).
Borrowing facilities
At 31 January 2026
Bank of America – 3 year ¥16,100 million revolving credit facility maturing 7 November 2027. The rollover date is 12 February
2026.
At 31 January 2025
ING Bank N.V. – 3 year ¥2,000 million revolving credit facility maturing 3 March 2026.
ING Bank N.V. – 3 year ¥7,000 million revolving credit facility maturing 23 November 2026.
Bank of America – 3 year ¥7,100 million revolving credit facility maturing 7 November 2027.
The covenants during the year relating to the ING Bank N.V. and Bank of America loans were as follows:
(i) Total borrowings shall not exceed 35% of the Company’s net asset value; and
(ii) The Company’s minimum net asset value shall be £225 million.
During the year, Bank of America removed covenant (ii). There were no breaches in loan covenants during the year.
Security has been provided to ING Bank N.V. and Bank of America in respect of the loans by way of floating charges.
The interest rate, maturity profiles and fair value of the bank loans are shown in note 18.
During the year, the existing ¥2bn and ¥7bn revolving credit facilities with ING were cancelled and incorporated into the cheaper
secured revolving credit facility with Bank of America (extended to ¥16.1bn).
12 Share capital
2026
Number
2026
£’000
2025
Number
2025
£’000
Allotted and fully paid ordinary shares of 2p each 245,320,073 4,906 279,491,301 5,590
Treasury shares of 2p each 68,932,412 1,379 34,761,184 695
314,252,485 6,285 314,252,485 6,285
At 31 January 2026 the Company had remaining authority to buy back 17,628,183 shares. 34,171,228 shares were bought back
during the year for total consideration of £42,137,000 (2025 – 30,266,184 shares for a total consideration of £35,219,000). Share
buy-backs are funded from the capital reserve.
During the year the Company issued no shares on a non pre-emptive basis (2025 – no shares).
Between 1 February and 26 March 2026, excluding the shares bought back as part of the recent 15% unconditional tender, the
Company did not issue any shares and bought back 2,821,169 shares.
Financial report
104
Annual Report and Financial Statements 2026
13 Capital and reserves
Share
capital
£’000
Share
premium
account
£’000
Distributable
capital
reserve
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 February 2025 6,285 260,270 – 21,521 99,445 2,169 389,690
Cancellation of share premium account – (260,270) 260,270 – – – –
Shares purchased for treasury – – – – (42,137) – (42,137)
Net loss on disposal of investments – – – – (2,627) – (2,627)
Changes in investment holding gains – – – – 8,211 – 8,211
Exchange differences on bank loans – – – – 6,869 – 6,869
Exchange differences on settlement
of investment transactions
– – – – (346) – (346)
Other exchange differences – – – – (1,202) – (1,202)
Net revenue return for the year – – – – – 1,981 1,981
Dividend paid in the year – – – – – (1,616) (1,616)
At 31 January 2026 6,285 – 260,270 21,521 68,213 2,534 358,823
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 February 2024 6,285 260,270 21,521 167,114 2,602 457,792
Shares purchased for treasury – – – (35,219) – (35,219)
Net loss on disposal of investments – – – (42,425) – (42,425)
Changes in investment holding gains – – – 7,560 – 7,560
Exchange differences on bank loans – – – 2,818 – 2,818
Exchange differences on settlement
of investment transactions
– – – (405) – (405)
Other exchange differences – – – 2 – 2
Net revenue return for the year – – – – 1,989 1,989
Dividend paid in the year – – – – (2,422) (2,422)
At 31 January 2025 6,285 260,270 21,521 99,445 2,169 389,690
The capital reserve includes investment holding losses of £8,076,000 (2025 – losses of £16,287,000) as disclosed in note 9. The
revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable.
On 7 August 2025, the Court of Session approved the cancellation of the amount standing to the credit of the Company’s share
premium account and the crediting of an equivalent amount to the company’s Distributable Capital Reserve. The Court Order
became effective when it was filed with Companies House on 22 August 2025.
14 Net asset value per ordinary share
The net asset value attributable to the ordinary shareholders and the net asset value per ordinary share at the year end were
asfollows:
2026 2025
Net asset value/shareholders’ funds* £358,823,000 £389,690,000
Number of ordinary shares in issue at year end
†
245,320,073 279,491,301
Shareholders’ funds per ordinary share/net asset value per ordinary share
(after deducting borrowings at book value)*
146.3p 139.4p
*
See Glossary of terms and Alternative Performance Measures on pages 125 to 128.
†
Excluding shares held in treasury.
105
Baillie Gifford Shin Nippon PLC
15 Contingent liabilities, guarantees and financial commitments
There were no contingent liabilities, guarantees or financial commitments at either year end.
16 Analysis of change in net debt
31 January
2025
£’000
Cash flows
£’000
Exchange
movement
£’000
Other
non-cash
changes
£’000
31 January
2026
£’000
Cash and cash equivalents
20,797 (2,561) (1,547) – 16,689
Loans due within one year
(83,676) 6,703 6,868 – (70,105)
(62,879) 4,142 5,321 – (53,416)
17 Related Parties and transactions with the Managers
The Directors’ fees for the year are detailed in the Directors’ remuneration report on page 79. No Director has a contract of service
with the Company. During the years reported no Director was interested in any contract or other matter requiring disclosure
under section 412 of the Companies Act 2006. Details of Directors’ holdings at 31 January 2026 are detailed in the Directors’
Remuneration report on page 80.
Baillie Gifford & Co Limited has been appointed as the Company’s Alternative Investment Fund Manager (‘AIFM’) and Company
Secretaries. Details of the terms of the Investment Management Agreement are set out on page 63 and details of the fees during
the year and the balances outstanding at the year end are shown in notes 3 and 11.
18 Financial instruments and risk management
As an Investment Trust, the Company invests in small Japanese company securities and makes other investments so as to achieve
its investment objective of long term capital growth. The Company borrows money when the Board and Managers have sufficient
conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its
investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and
markets in which it invests and could result in a reduction in the Company’s net assets.
These risks are categorised as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and
creditrisk. The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood
ofapermanent loss of capital rather than to minimise the short term volatility.
The Company may enter into derivative transactions as explained in the objective and policy on pages 46 and 47. No such
transactions were undertaken in the year under review.
The risk management policies and procedures outlined in this note have not changed substantially from the previous
accountingyear.
Market risk
The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of
changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The
Board of Directors reviews and agrees policies for managing these risks and the Company’s Managers both assess the exposure
to market risk when making individual investment decisions and monitor the overall level of market risk across the investment
portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown in note 9.
i. Currency risk
The Company’s assets, liabilities and income are principally denominated in yen. The Company’s functional currency and that in
which it reports its results is sterling. Consequently, movements in the yen/sterling exchange rate will affect the sterling value of
those items.
The Managers monitor the Company’s yen exposure (and any other overseas currency exposure) and report to the Board on a
regular basis. The Managers assess the risk to the Company of the ov
erseas currency exposure by considering the effect on the
Company’s net asset value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income
and expenses are exposed. However, the country in which a company is quoted is not necessarily where it earns its profits. The
movement in exchange rates on overseas earnings may have a more significant impact upon a company’s valuation than a simple
translation of the currency in which the company is quoted.
Yen borrowings are used periodically to limit the Company’s exposure to anticipated future changes in the yen/sterling exchange
rate which might otherwise adversely affect the value of the portfolio of investments. The Company may also use forward
currency contracts, although none have been used in the current or prior year.
Financial report
106
Annual Report and Financial Statements 2026
18 Financial instruments and risk management (continued)
i. Currency risk (continued)
Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability
is quoted, is shown below.
At 31 January 2026
Investments
£’000
Cash and
deposits
£’000
Bank
loans
£’000
Other debtors
and creditors
£’000
Net
exposure
£’000
Yen 411,604 16,628 (70,105) 1,373 359,500
Total exposure to currency risk 411,604 16,628 (70,105) 1,373 359,500
Sterling – 61 – (738) (677)
411,604 16,689 (70,105) 635 358,823
At 31 January 2025
Investments
£’000
Cash and
deposits
£’000
Bank
loans
£’000
Other debtors
and creditors
£’000
Net
exposure
£’000
Yen 453,211 20,752 (83,676) (55) 390,232
Total exposure to currency risk 453,211 20,752 (83,676) (55) 390,232
Sterling – 45 – (587) (542)
453,211 20,797 (83,676) (642) 389,690
Currency risk sensitivity
At 31 January 2026, if sterling had strengthened by 10% against the yen, with all other variables held constant, total net assets
and net return on ordinary activities after taxation would have decreased by £35,950,000 (2025 – decreased by £39,023,000).
A10% weakening of sterling against the yen, with all other variables held constant, would have had a similar but opposite effect
on the Financial Statement amounts.
ii. Interest rate risk
Interest rate movements may affect directly:
• the fair value of any investments in fixed interest rate securities;
• the level of income receivable on cash deposits;
• the fair value of the Company’s fixed-rate borrowings; and
• the interest payable on any variable rate borrowings which the Company may take out.
They may also impact upon the market value of the Company’s investments as the effect of interest rate movements upon the
earnings of a company may have a significant impact upon the valuation of that company’s equity.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account
when making investment decisions and when entering borrowing agreements.
The Board reviews on a regular basis the amount of investments in cash and the income receivable on cash deposits.
The Company finances part of its activities through borrowings at approved levels. The amount of such borrowings and the
approved levels are monitored and reviewed regularly by the Board.
The interest rate risk profile of the Company’s financial assets and liabilities at 31 January 2026 is shown below. There was no
significant change to the interest rate risk profile during the year.
107
Baillie Gifford Shin Nippon PLC
18 Financial instruments and risk management (continued)
ii. Interest rate risk (continued)
Financial assets
2026
Fair value
£’000
2026
Weighted
average
interest rate
2025
Fair value
£’000
2025
Weighted
average
interest rate
Cash:
Yen 16,628 (0.00%) 20,752 (0.16%)
Sterling 61 1.37% 45 3.60%
16,689 20,797
The cash deposits generally comprise overnight call or short term money market deposits and earn interest at floating rates based
on prevailing bank base rates.
Financial liabilities
The interest rate risk profile of the Company’s financial liabilities at 31 January was:
2026
Book value
£’000
2026
Weighted
average
interest rate
2026
Weighted
average
period until
maturity
2025
Book value
£’000
2025
Weighted
average
interest rate
2025
Weighted
average
period until
maturity
Bank loans:
Yen denominated – floating rate 70,105 1.7% 645 days 83,676 1.7% 25 days
Interest rate risk sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates at the balance sheet date and with
the stipulated change taking place at the beginning of the financial year and held constant throughout the repor
ting period in the
case of instruments that have floating rates.
An increase of 1% in interest rates, with all other variables being held constant, would have decreased the Company’s total net
assets and total return on ordinary activities for the year ended 31 January 2026 by £691,000 (2025 – £542,000). This is mainly
due to the Company’s exposure to interest rates on its floating rate bank loans and cash balances. A decrease of 1% would have
had anequal but opposite effect.
iii. Other price risk
Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the
Company’s net assets. The Company’s exposure to changes in market prices relates to the fixed asset investments as disclosed
innote 9.
The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant
information from the Manager. The Board meets regularly and at each meeting reviews investment performance, the investment
portfolio and the rationale for the current investment positioning to ensure consistency with the Company’s objectives and
investment policies. The portfolio does not seek to reproduce the index, investments are selected based upon the merit of
individual companies and therefore performance may well diverge from the comparative index.
Other price risk sensitivity
A full list of the Company’s investments is shown on pages 43 to 45. In addition, analysis of the portfolio by investment theme is
contained in the Strategic Report. 112.6% of the Company’s net assets are invested in listed equities (2025 – 113.9%). A 10%
increase in listed equity valuations at 31 January 2026 would have increased total assets and total return on ordinary activities
by£40,403,000 (2025 – £44,403,000). A decrease of 10% would have had an equal but opposite effect.
2.1% (2025 – 2.4%) of the Company’s net assets are invested in private company investments. The fair valuation of the private
company investments is influenced by the judgements and estimates made in the fair valuation process (see 1(p) on page 98).
Asensitivity analysis is provided below which recognises that the valuation methodologies employed involve subjectivity in their
significant unobservable inputs and illustrates the sensitivity of the valuations to these inputs. The inputs have been flexed by
+/-10%with the exception of the recent transaction price valuation approach as it does not involve significant subjectivity.
Thetable also provides the range of values for the key unobservable inputs.
Financial report
108
Annual Report and Financial Statements 2026
18 Financial instruments and risk management (continued)
iii. Other price risk (continued)
As at 31 January 2026 Significant unobservable inputs*
Valuation technique
Fair value as
at 31 January
2026
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range
#
Sensitivity
%
Sensitivity to changes
in significant
unobservable inputs
Benchmark
performance
2,459
Selection of
comparable
companies
a,b,c,d -31.1%
to
60.5%
5.3% 10% If input comparable
benchmark performance
changed by +/- 10%, the
fair value would change
by +/- £245,913.
Price of Recent
Investment
5,113 n/a
¶
a,b n/a n/a 10% A movement by +/- 10%
in the company valuations
for those based on a
recent transaction would
change the fair value by
by +/- £511,198.
As at 31 January 2025 Significant unobservable inputs*
Valuation technique
Fair value as
at 31 January
2025
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range
#
Sensitivity
%
Sensitivity to changes
in significant
unobservable inputs
Market approach using
comparable traded
multiples
7,322
EV / LTM
revenue
multiple
‡
a,b,c,d,e 1.8x to
6.5x
2.6x 10% If EV/LTM multiples
changed by +/- 10%,
the fair value would
change by £648,471 and
-£640,574.
Illiquidity
discounts
f 10% 10% 10% If the illiquidity discount is
changed by +/-10%, the
fair value would change by
£4,172 and -£4,167.
Transaction
implied
premium and
discounts
g 21% 21% 10% If a +/- 10% adjustment is
applied to the calculated
premiums the fair value
would change by +/-
£204,995.
Benchmark
performance
1,864 Selection of
comparable
companies,
indicies and
ETFs
§
a,b,c,d -31% to
-22%
-27% 10% If input comparable
benchmark performance
changed by +/- 10%, the
fair value would change
by +/- £186,429.
Insolvency risk
discount
a,b,h 75% 75% 10% If the insolvency risk
discount is
changed by
+/-10%, the fair value
would change by +/-
£559,288.
†
See explanation for other unobservable inputs on page 109 (sections ‘a’ to ‘h’ as relevant).
#
Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication
ofthe typical multiple or adjustment being applied across the portf
olio.
¶
Whilst a recent transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor in the
unobservable inputs noted in the above table. However, the transaction price itself is observable.
‡
Enterprise value (EV) divided by the last twelve months (LTM) revenue.
§
See explanation for the selection of comparable companies on page 109 section ‘c’. The percentage movements reflect the movement in overall
company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed.
* Significant unobservable inputs
The variable inputs applicable to each broad category of valuation basis will vary depending on the particular circumstances
ofeach private company valuation. An explanation of each of the key variable inputs is provided below. The assumptions made
in the production of the inputs are described in note 1(p) on page 98.
109
Baillie Gifford Shin Nippon PLC
18 Financial instruments and risk management (continued)
iii. Other price risk (continued)
a. Application of valuation basis
Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each
investment. When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the
achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable
benchmarks and companies. For those investments where a trading multiples approach can be taken, the methodology will
factor in revenue, earnings or net assets as appropriate for the investment, and where a suitable correlation can be identified
with the comparable companies then a regression analysis will be performed. Discounted cash flows will also be considered
where appropriate forecasts are available.
b. Probability estimation of liquidation events
The probability of a liquidation event such as a company sale, or alternatively an initial public offering (`IPO’), is a key variable
input in the transaction-based and multiples-based valuation techniques. The probability of an IPO versus a company sale is
typically estimated from the outset to be 50:50 if there has been no indication by the company of pursuing either of these
routes. If the company has indicated an intention to IPO, the probability is increased accordingly to 75% and if an IPO has
become a certainty the probability is increased to 100%. Likewise, in a scenario where a company is pursuing a trade sale
the weightings will be adjusted accordingly in favour of a sale scenario, or in a situation where a company is underperforming
expectations significantly and therefore deemed very unlikely to pursue an IPO.
c. Selection of comparable companies
The selection of comparable companies is assessed individually for each investment at the point of investment, and the
relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting
appropriate comparable companies are the industry sector in which they operate, the geography of the company’s operations,
the respective revenue and earnings growth rates and the operating margins. Typically, between 4 and 10 comparable
companies will be selected for each investment, depending on how many relevant comparable companies are identified. The
resultant revenue or earnings multiples or share price movements derived will vary depending on the companies selected and
the industries in which they operate.
d. Selection of appropriate benchmarks
The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of
each company are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used for
comparison.
e. Estimated sustainable earnings
The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and
where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on
the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable.
Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will
impact earnings going forward, then forward estimated revenue or earnings may be used instead.
f. Application of illiquidity discount
The application of an illiquidity discount will be applied either through the calibration of a valuation against the most
recent transaction, or by application of a specific discount. The discount applied where a calibration is not appropriate is
typically 10%, reflecting the fact that the majority of the investments held are substantial companies with some secondary
marketactivity.
g. Transaction implied premium and discount
Where there is an implied company valuation available as a result of an external arm’s length transaction, the ongoing valuation
will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable
companies and comparing this to a transaction implied valuation, and could result in an implied premium or discount compared
to comparable companies at the point of transaction. This discount or premium will be considered in future valuations, and may
be reduced due to factors such as period of time since the transaction and company performance. Where a calibrated approach
is not appropriate, a discount for illiquidity will be applied as noted in (f) above.
h. Insolvency risk discount
Insolvency risk discount is applied to investments where there is considered to be uncertainty surrounding the entity’s ability to
continue as a going concern. The level of discount considers the portfolio company’s cash runway and underlying performance.
Financial report
110
Annual Report and Financial Statements 2026
18 Financial instruments and risk management (continued)
iii. Other price risk (continued)
Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidityrisk
isnot significant in normal market conditions as the majority of the Company’s assets are in investments that are readily
realisable.
The Company’s investment portfolio is in Japanese small-cap equities which are typically less liquid than larger capitalisation stocks.
The Managers monitor the liquidity of the portfolio on an ongoing basis and relevant guidelines are in place. The investment portfolio
is sufficiently liquid to allow stocks to be realised to repay borrowings if required.
The Board provides guidance to the Managers as to the maximum exposure to any one holding (see objective and policy on
pages46 and 47).
The maturity profile of the Company’s financial liabilities at 31 January was:
2026
£’000
2025
£’000
In less than one year:
– repayment of loan 70,105 83,676
– accumulated interest 39 104
70,144 83,780
The Company has the power to take out borrowings, which gives it access to additional funding when required.
Credit risk
This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in
the Company suffering a loss. This risk is managed as follows:
• The Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate
segregates the assets of the Company. The Managers monitors the Company’s risk by reviewing the custodian’s internal control
reports and reporting their findings to the Board;
• Investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Managers.
Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian bank ensures that
the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or
securities away from the Company is completed;
• The creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements,
wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained
interest, are subject to rigorous assessment by the Managers; and
• At 31 January 2026 and 2025, all cash deposits were held with the custodian bank. The credit risk of the custodian is reviewed
as detailed above. Cash may also be held at banks that are regularly reviewed by the Managers. If the credit rating of a bank
where a cash deposit was held fell significantly, the Managers would endeavour to move the cash to an institution with a
superior credit rating.
111
Baillie Gifford Shin Nippon PLC
18 Financial instruments and risk management (continued)
iii. Other price risk (continued)
Credit risk exposure
The maximum exposure to credit risk at 31 January was:
2026
£’000
2025
£’000
Cash and deposits 16,689 20,797
Debtors 2,315 1,883
19,004 22,680
None of the Company’s financial assets are past due or impaired.
Fair value of financial assets and financial liabilities
The Company’s investments are stated at fair value and the Directors are of the opinion that the reported values of the Company’s
other financial assets and liabilities approximate to fair value with the exception of the long term borrowings which are stated at
amortised cost. The fair value of the loans is shown below.
Financial assets
2026
Book
value
£’000
2026
Fair *
value
£’000
2025
Book
value
£’000
2025
Fair *
value
£’000
Floating rate yen bank loans
†
70,105 70,105 83,676 83,676
70,105 70,105 83,676 83,676
*
The fair value of each bank loan is calculated using methodologies consistent with International Private Equity and Venture Capital Valuation
(‘IPEV’) guidelines.
† All short-term floating rate borrowings are stated at book cost which is considered to be equal to their fair value given the facilities are revolving
credit facilities.
Capital management
The capital of the Company is its share capital and reserves as set out in note 13 together with its borrowings (see note 11).
TheCompany’s investment objective and policy is set out on pages 46 and 47. In pursuit of the Company’s objective, theBoard
has a responsibility for ensuring the Company’s ability to continue as a going concern and details of the related risks andhow they
are managed are set out on pages 49 to 55. The Company has the ability to buy back and issue shares (see pages 65 and 66) and
changes to the share capital during the year are set out in note 12. The Company does not have any externally imposed capital
requirements other than the covenants on its loans which are detailed in note 11.
19 Subsequent events
On 18 February 2026, shareholders approved a tender offer for up to 15% of the Company’s issued share capital (excluding
shares held in treasury), details of which are set out in the circular dated 23 January 2026. Under the terms of the tender offer,
eligible shareholders were entitled to tender shares at a price equal to the Net Asset Value per share as at the calculation date,
less the costs of the tender and a 2% discount. The tender offer was oversubscribed and, accordingly, 36,798,009 ordinary
shares were purchased on 19 March 2026. Shares purchased pursuant to the tender have been held in treasury.
In addition, the Board has recommended a final dividend of 0.69p per ordinary share in respec
t of the year ended 31 January
2026, payable on 26 May 2026 to shareholders on the register at the close of business on 17 April 2026.
These events are considered non-adjusting events under FRS 102 Section 32 and, as such, have not been reflected in the
Financial Statements for the year ended 31 January 2026.
Shareholder
information
113
Baillie Gifford Shin Nippon PLC
Notice of Annual
General Meeting
Moorgate
Moorgate
Copthall Ave
Throgmorton Ave
Finsbury
Moorgate
Circus
London Wall
London Wall
Basinghall Ave
The Annual General Meeting of the Company will be
held at the ICAEW, Chartered Accountants’ Hall,
1Moorgate Place, London, EC2R 6EA on Thursday
21 May 2026 at 11.30am. You will find directions to
the venue by scanning the QR code above.
To accurately reflect the views of shareholders of the
Company, the Board intends to hold the AGM voting
on a poll.
The Board encourages all shareholders to submit
proxy voting forms as soon as possible and, in any
event, by no later than 11.30am on 19 May 2026.
Should shareholders have questions for the Board
orthe Managers or any queries as to how to vote
orhow to attend the meeting they are welcome
asalways to submit them by email to
enquiries@bailliegifford.com or call 08009172112.
Baillie Gifford may record your call.
For details of how to vote your shares if
heldviaaplatform please refer to
theaic.co.uk/how-to-vote-your-shares.
ICAEW
Shareholder information
114
Annual Report and Financial Statements 2026
Notice is hereby given that the forty first Annual
General Meeting of Baillie Gifford Shin Nippon PLC
will be held at ICAEW, Chartered Accountants’ Hall,
1Moorgate Place, London, EC2R 6EA, on Thursday,
21May 2026 at 11.30am for the following purposes.
All Resolutions are ordinary business.
To consider and, if thought fit, to pass the following
Resolutions as Ordinary Resolutions:
01. To receive and adopt the Financial Statements
of the Company for the year ended 31 January
2026 with the Reports of the Directors and of
the Independent Auditor thereon.
02. To approve the Directors’ Remuneration Policy.
03
. To approve the Directors’ Annual Report on
Remuneration for the year ended 31 January
2026.
04
. To declare a final dividend of 0.69p per
ordinaryshare.
05
. To re-elect Ms CEC Finn as a Director of
theCompany.
06
. To re-elect Ms AE Rotheroe as a Director of
theCompany.
07
. To re-elect Mr J Skinner as a Director of the
Company.
08
. To re-elect Mr KJ Troup as a Director of the
Company.
09. To re-elect Professor S Vijayakumar as a Director
of the Company.
10
. To re-appoint Johnston Carmichael LLP as
Independent Auditor of the Company to hold
office from the conclusion of this meeting until
the conclusion of the next Annual General
Meeting at which the Financial Statements are
laid before the Company.
11
. To authorise the Directors to determine the
remuneration of the Independent Auditor of
theCompany.
12
. That, in substitution for any existing authority
but without prejudice to the exercise of any such
authority prior to the date hereof, the Directors
of the Company be and they are hereby
generally and unconditionally authorised in
accordance with section 551 of the Companies
Act 2006 to exercise all the powers of the
Company to allot shares in the Company and to
grant rights to subscribe for or to convert any
security into shares in the Company (‘Securities’)
provided that such authority shall be limited to
the allotment of shares and the grant of rights
in respect of shares with an aggregate nominal
value of up to £1,371,202.16 (representing
33.33% of the nominal value of the issued
share capital excluding treasury shares as at
26 March 2026), such authority to expire at
the conclusion of the next Annual General
Meeting of the Company after the passing of
this Resolution or on the expiry of 15 months
from the passing of this Resolution, whichever is
the earlier, unless previously revoked, varied or
extended by the Company in a general meeting,
save that the Company may at any time prior
to the expiry of this authority make an offer or
enter into an agreement which would or might
require Securities to be allotted or granted after
the expiry of such authority and the Directors
shall be entitled to allot or grant Securities in
pursuance of such an offer or agreement as if
such authority had not expired.
To consider and, if thought fit, to pass the following
Resolutions as Special Resolutions:
13
. That, subject to the passing of Resolution 12
above, and in substitution for any existing power
but without prejudice to the exercise of any such
power prior to the date hereof, the Directors of
the Company be and they are hereby generally
empowered, pursuant to sections 570 and 573
of the Companies Act 2006 (‘the Act’) to allot
equity securities (within the meaning of section
560(1) of the Act) for cash, either pursuant to the
authority given by Resolution 12 above or by way
of the sale of treasury shares wholly for cash as
if section 561(1) of the Act did not apply to any
such allotment or sale, provided that this power:
a. expires at the conclusion of the next Annual
General Meeting of the Company after
the passing of this Resolution or on the
expiry of 15 months from the passing of this
Resolution, whichever is the earlier, save that
the Company may, before such expiry, make
an offer or agreement which would or might
require equity securities to be allotted after
such expiry and the Directors may allot equity
securities in pursuance of any such offer or
agreement as if the power conferred hereby
had not expired; and
115
Baillie Gifford Shin Nippon PLC
b. shall be limited to the allotment of equity
securities up to an aggregate nominal value
of £411,401.80 being approximately 10% of
the nominal value of the issued share capital
excluding treasury shares of the Company
as at 26 March 2026.
14
. That, in substitution for any existing authority
but without prejudice to the exercise of any such
authority prior to the date hereof, the Company
be and is hereby generally and unconditionally
authorised, pursuant to and in accordance
with section 701 of the Companies Act 2006
(‘the Act’) to make market purchases (within
the meaning of section 693(4) of the Act) of its
ordinary shares (either for retention as treasury
shares for future reissue, resale, transfer or
cancellation), provided that:
a. the maximum aggregate number of ordinary
shares hereby authorised to be purchased
is 30,834,564 being approximately 14.99%
of the issued ordinary share capital of the
Company as at the date of the passing of
this Resolution;
b. the minimum price (excluding expenses)
which may be paid for each ordinary share
is the nominal value of that share;
c. the maximum price (excluding expenses)
which may be paid for each ordinary share
shall not be more than the higher of:
i. 5% above the average closing price on the
London Stock Exchange of an ordinary share
over the five business days immediately
preceding the date of purchase; and
ii. the higher of the last independent trade and
the highest current independent bid on the
London Stock Exchange; and
d. unless previously varied, revoked or renewed
by the Company in a general meeting, the
authority hereby conferred shall expire at the
conclusion of the Company’s next Annual
General Meeting, save that the Company
may, prior to such expiry, enter into a contract
to purchase ordinary shares under such
authority which will or might be completed or
executed wholly or partly after the expiration
of such authority and may make a purchase of
ordinary shares pursuant to any such contract.
By order of the Board
Baillie Gifford & Co Limited
Managers and Secretaries
13 April 2026
Shareholder information
116
Annual Report and Financial Statements 2026
Notes
01. As a member you are entitled to appoint a proxy
or proxies to exercise all or any of your rights
to attend, speak and vote at the AGM. A proxy
need not be a member of the Company but
must attend the AGM to represent you. You may
appoint more than one proxy provided each
proxy is appointed to exercise rights attached to
different shares. You can only appoint a proxy
using the procedure set out in these notes and
the notes to the proxy form. You may not use
any electronic address or telephone number
provided either in this notice or any related
documents (including the Financial Statements
and proxy form) to communicate with the
Company for any purpose other than those
expressly stated.
02. To be valid any proxy form or other instrument
appointing a proxy, together with any power
of attorney or other authority under which it
is signed or a certified copy thereof, must be
received by post or (during normal business hours
only) by hand at the Registrars of the Company
at Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol, BS99 6ZY or
eproxyappointment.com no later than 48 hours
(excluding non-working days) before the time of
the meeting or any adjourned meeting.
03. CREST members who wish to appoint a
proxyorproxies through the CREST electronic
proxy appointment service may do so by
usingthe procedures described in the CREST
Manual and/or by logging on to the website
euroclear.com/CREST. CREST personal
members or other CREST sponsored members,
and those CREST members who have appointed
a voting service provider(s), should refer to their
CREST sponsor or voting service provider(s),
who will be able to take the appropriate action
on their behalf.
04. In order for a proxy appointment or instruction
made using the CREST service to be valid, the
appropriate CREST message (a ‘CREST Proxy
Instruction’) must be properly authenticated
in accordance with Euroclear UK & Ireland
Limited’s specifications, and must contain the
information required for such instruction, as
described in the CREST Manual. The message,
regardless of whether it constitutes the
appointment of a proxy or is an amendment to
the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted
so as to be received by the Company’s registrar
(ID 3RA50) no later than 48 hours (excluding
non-working days) before the time of the
meeting or any adjournment. For this purpose,
the time of receipt will be taken to be the time
(as determined by the timestamp applied to
the message by the CREST Application Host)
from which the Company’s registrar is able to
retrieve the message by enquiry to CREST in
the manner prescribed by CREST. After this time
any change of instructions to proxies appointed
through CREST should be communicated to the
appointee through other means.
05. CREST members and, where applicable, their
CREST sponsors, or voting service providers
should note that Euroclear UK & Ireland Limited
does not make available special procedures
in CREST for any particular message. Normal
system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST
member is a CREST personal member, or
sponsored member, or has appointed a voting
service provider(s), to procure that his/her
CREST sponsor or voting service provider(s)
take(s)) such action as shall be necessary to
ensure that a message is transmitted by means
of the CREST system by any particular time.
Inthisconnection, CREST members and, where
applicable, their CREST sponsors or voting
system providers are referred, in particular, to
those sections of the CREST Manual concerning
practical limitations of the CREST system
andtimings.
06. The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out
in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
07. The return of a completed proxy form or other
instrument of proxy will not prevent you attending
the AGM and voting in person if you wish.
117
Baillie Gifford Shin Nippon PLC
08. Pursuant to Regulation 41 of the Uncertificated
Securities Regulations 2001 and section 311 of
the Companies Act 2006 the Company specifies
that to be entitled to attend and vote at the
AGM (and for the purpose of the determination
by the Company of the votes they may cast),
shareholders must be registered in the Register
of Members of the Company no later than 48
hours (excluding non-working days) prior to the
commencement of the AGM or any adjourned
meeting. Changes to the Register of Members
after the relevant deadline shall be disregarded
in determining the rights of any person to attend
and vote at the meeting.
09. Any person to whom this notice is sent who is
a person nominated under section 146 of the
Companies Act 2006 to enjoy information rights
(a ‘Nominated Person’) may, under an agreement
between him/her and the shareholder by whom
he/she was nominated, have a right to be
appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting.
If a Nominated Person has no such proxy
appointment right or does not wish to exercise
it,he/she may, under any such agreement, have
a right to give instructions to the shareholder as
to the exercise of voting rights.
10. The statement of the rights of shareholders in
relation to the appointment of proxies in Notes
1 and 2 above does not apply to Nominated
Persons. The rights described in those Notes
can only be exercised by shareholders of the
Company.
11. The members of the Company may require the
Company to publish, on its website, (without
payment) a statement (which is also passed
to the Auditor) setting out any matter relating
to the audit of the Company’s Financial
Statements, including the Auditor’s report and
the conduct of the audit. The Company will
be required to do so once it has received such
requests from either members representing
at least 5% of the total voting rights of the
Company or at least 100 members who have
a relevant right to vote and hold shares in the
Company on which there has been paid up an
average sum per member of at least £100. Such
requests must be made in writing and must state
your full name and address and be sent to the
Company at Calton Square, 1 Greenside Row,
Edinburgh, EH1 3AN.
12. Information regarding the AGM, including
information required by section 311A of the
Companies Act 2006, is available from the
Company’s page of the Managers’ website at
shinnippon.co.uk.
13. Members have the right to ask questions at
themeeting in accordance with section 319A
ofthe Companies Act 2006.
14. As at 26 March 2026 (being the last practicable
date prior to the publication of this notice) the
Company’s issued share capital consisted of
205,700,895 ordinary shares excluding treasury
shares, carrying one vote each. Therefore,
the total voting rights in the Company as at
26March 2026 were 205,700,895 votes.
15. Any person holding 3% or more of the total
voting rights of the Company who appoints
a person other than the Chair of the meeting
as his/her proxy will need to ensure that both
he/she and his/her proxy complies with their
respective disclosure obligations under the UK
Disclosure Guidance and Transparency Rules.
16. No Director has a contract of service with
theCompany.
Shareholder information
118
Annual Report and Financial Statements 2026
Further shareholder
information
Baillie Gifford Shin Nippon is an investment
trust. Investment trusts offer investors the
following:
• participation in a diversified portfolio of shares;
• constant supervision by experienced professional
managers; and
• the Company is free from capital gains tax on
capital profits realised within its portfolio although
investors are still liable for capital gains tax on
profits when selling their investment.
How to invest
The Company’s shares are traded on the London
Stock Exchange. They can be bought by placing an
order with a stockbroker or by asking a professional
adviser to do so. If you are interested in investing
directly in Baillie Gifford Shin Nippon, you can do so
online. There are a number of companies offering real
time online dealing services – find out more by visiting
the investment trust pages at bailliegifford.com.
Sources of further information on the
Company
The price of shares is quoted daily in the Financial
Times and can also be found on the Company’s
pageon Baillie Gifford’s website at
shinnippon.co.uk, Trustnet at trustnet.com and on
other financial websites. Company factsheets are
also available on the Baillie Gifford website and are
updated monthly. These are available from Baillie
Gifford on request.
Baillie Gifford Shin Nippon share identifiers
ISIN GB00BFXYH242
Sedol BFXYH24
Ticker BGS
Legal Entity Identifier X5XCIPCJQCSUF8H1FU83
The ordinary shares of the Company are listed on
the London Stock Exchange and their price is shown
in the Financial Times.
Key dates
The Annual Report and Financial Statements are
normally issued in March or early April and the
AGM is normally held during May. Any dividends,
if applicable, will be paid as a single final payment
shortly after the Company’s AGM.
Capital gains tax
The cost for capital gains taxation purposes to
shareholders who subscribed for ordinary shares
(with warrants attached) is apportioned between
theordinary shares and the warrants on the
following basis:
Apportioned
cost *
First day of
dealingvalue *
Cost of each ordinary share 9.45p 8.9p
Cost of fraction for warrant 0.55p 2.7p
10.00p
The cost for capital gains tax purposes to
shareholders who subscribed for the conversion
shares, subsequently converted into new ordinary
shares (with warrants attached) is apportioned
between the ordinary shares and the warrants as
setout in the placing and offer document dated
18May 1994.
The attributable costs are:
Apportioned
cost *
First day of
dealingvalue *
Cost of each ordinary share 32.96p 35.6p
Cost of fraction for warrant 15.37p 16.6p
*
Adjusted for the five for one share split on 21 May 2018.
If shareholders are in any doubt as to their
personal taxation position they should consult their
professional advisers.
119
Baillie Gifford Shin Nippon PLC
Share register enquiries
Computershare Investor Services PLC maintains
theshare register on behalf of the Company. In
the event of queries regarding shares registered in
yourown name, please contact the Registrars on
0370 889 3223.
This helpline also offers an automated self-service
functionality (available 24 hours a day, 7 days a
week) which allows you to:
• hear the latest share price;
• confirm your current share holding balance; and
• order Change of Address and Stock Transfer
forms.
By quoting the reference number on your share
certificate you can check your holding on the
Registrar’s website at investorcentre.co.uk.
They also offer a free, secure, share management
website service which allows you to:
• view your share portfolio and see the latest market
price of your shares;
• calculate the total market price of each
shareholding;
• view price histories and trading graphs;
• change address details; and
• use online dealing services.
To take advantage of this service, please log in at
investorcentre.co.uk and enter your Shareholder
Reference Number and Company Code (this
information can be found on your share certificate).
How to vote your shares
As a shareholder you have a say on how the Company
is run. The following link will take you through to The
Association of Investment Companies (AIC) website
where there is information on how to vote your shares
if you hold them via one of the major platforms:
theaic.co.uk/how-to-vote-your-shares.
Electronic proxy voting
If you hold stock in your own name you can choose
to vote by returning proxies electronically at
investorcentre.co.uk/eproxy.
If you have any questions about this service please
contact Computershare on 0370 889 3223.
CREST proxy voting
If you are a user of the CREST system (including
a CREST Personal Member), you may appoint one
or more proxies or give an instruction to a proxy by
having an appropriate CREST message transmitted.
For further information please refer to the CREST
Manual.
Where this has been received in a country where
the provision of such a service would be contrary to
local laws or regulations, this should be treated as
information only.
These Financial Statements have been approved
by the Directors of Baillie Gifford Shin Nippon PLC.
Baillie Gifford only provides information about its
products and does not provide investment advice.
The staff of Baillie Gifford and Baillie Gifford Shin
Nippon’s Directors may hold shares in Baillie Gifford
Shin Nippon and may buy or sell such shares from
time to time.
Shareholder information
120
Annual Report and Financial Statements 2026
Data protection
The Company is committed to ensuring the
confidentiality and security of any personal data
provided to it. Further details on how personal data
is held and processed on behalf of the Company
can be found in the privacy policy available on the
Company’s website shinnippon.co.uk.
Alternative Investment Fund Managers
Regulations (‘AIFMR’)
In accordance with the AIFM Regulations,
information in relation to the Company’s leverage
and the remuneration of the Company’s AIFM,
Baillie Gifford & Co Limited, is required to be
made available to investors. In accordance with
the Regulations, the AIFM remuneration policy
is available at bailliegifford.com or on request
(see contact details in the ‘Company information’
section on page 129) and the most recent numerical
remuneration disclosures in respect of the
AIFM’s relevant reporting period are available at
bailliegifford.com.
Leverage
The Company’s maximum and actual leverage levels
(see Glossary of terms and Alternative Performance
Measures on pages 125 to 128) at 31 January 2026
were as follows:
Gross
method
Commitment
method
Maximum limit 2.50:1 2.00:1
Actual 1.19:1 1.19:1
Automatic Exchange of Information
In order to fulfil its obligations under UK tax
legislation relating to the automatic exchange
ofinformation, Baillie Gifford Shin Nippon PLC is
required to collect and report certain information
about certain shareholders.
The legislation requires investment trust companies
to provide personal information to HMRC on
certain investors who purchase shares in investment
trusts. Accordingly, Baillie Gifford Shin Nippon PLC
must provide information annually to the local
tax authority on the tax residencies of a number
of non-UKbased certificated shareholders and
corporate entities.
Shareholders, excluding those whose shares are
held in CREST, who come on to the share register
will be sent a certification form for the purposes of
collecting this information.
For further information, please see HMRC’s
QuickGuide: Automatic Exchange of Information –
information for account holders gov.uk/government/
publications/exchange-of-information-account-
holders.
121
Baillie Gifford Shin Nippon PLC
Communicating
with shareholders
Trust magazine Shin Nippon web page at shinnippon.co.uk
Trust magazine
Trust is the Baillie Gifford investment trust magazine
which is published twice a year. It provides an insight
to our investment approach by including interviews
with our fund managers, as well as containing
investment trust news, investment features and
articles about the trusts managed by Baillie Gifford,
including Baillie Gifford Shin Nippon. Trust plays an
important role in helping to explain our products so
that readers can really understand them.
You can subscribe to Trust magazine or view a digital
copy at bailliegifford.com/trust
Baillie Gifford Shin Nippon on the Web
Up-to-date information about Baillie Gifford Shin
Nippon, including a monthly commentary, recent
portfolio information and performance figures, can
be found on the Company’s page of the Managers’
website at shinnippon.co.uk.
You can also find a brief history of Baillie Gifford
Shin Nippon, an explanation of the effects of gearing
and a flexible performance reporting tool.
Suggestions and questions
Any suggestions on how communications with
shareholders can be improved are welcomed, so
please contact the Baillie Gifford Client Relations
Team and give them your suggestions. They will also
be very happy to answer questions that you may
have about Baillie Gifford Shin Nippon.
Client relations team contact details
You can contact the Baillie Gifford Client Relations
Team by telephone, email or post:
Telephone: +44 (0)800 917 2112
Your call may be recorded for training or monitoring
purposes.
Email: enquiries@bailliegifford.com
Website: bailliegifford.com
Baillie Gifford Client Relations Team
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
Please note that Baillie Gifford is not permitted
to give financial advice. If you would like advice,
please ask an authorised intermediary.
Shareholder information
122
Annual Report and Financial Statements 2026
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123
Baillie Gifford Shin Nippon PLC
Third party data
provider disclaimer
No third party data provider (‘Provider’) makes any
warranty, express or implied, as to the accuracy,
completeness or timeliness of the data contained
herewith nor as to the results to be obtained by
recipients of the data. No Provider shall in any
way be liable to any recipient of the data for any
inaccuracies, errors or omissions in the index data
included in this document, regardless of cause,
or for any damages (whether direct or indirect)
resulting therefrom.
No Provider has any obligation to update, modify
or amend the data or to otherwise notify a recipient
thereof in the event that any matter stated herein
changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have
any liability whatsoever to you, whether in contract
(including under an indemnity), in tort (including
negligence), under a warranty, under statute or
otherwise, in respect of any loss or damage suffered
byyou as a result of or in connection with any
opinions, recommendations, forecasts, judgements,
or any other conclusions, or any course of action
determined, by you or any third party, whether or
not based on the content, information or materials
contained herein.
MSCI Index data
Source: MSCI. The MSCI information may only be
used for your internal use, may not be reproduced
or redisseminated in any form and may not be
used as a basis for or a component of any financial
instruments or products or indices. None of the MSCI
information is intended to constitute investment
advice or a recommendation to make (or refrain from
making) any kind of investment decision and may
not be relied on as such. Historical data and analysis
should not be taken as an indication or guarantee
of any future performance analysis, forecast or
prediction.
The MSCI information is provided on an ‘as is’
basisand the user of this information assumes
theentire risk of any use made of this information.
MSCI,each of its affiliates and each other person
involved in or related to compiling, computing or
creating any MSCI information collectively, the
‘MSCI Parties’ expressly disclaims all warranties
(including, without limitation, any warranties of
originality, accuracy, completeness, timeliness,
non-infringement, merchantability and fitness for a
particular purpose) with respect to this information.
Without limiting any of the foregoing, in no event
shall any MSCI Party have any liability or any direct,
indirect, special, incidental, punitive, consequential
(including, without limitation, lost profits) or any
other damages (msci.com).
Shareholder information
124
Annual Report and Financial Statements 2026
The EU Sustainable Finance Disclosure Regulation
(‘SFDR’) does not have a direct impact in the UK
due to Brexit, however, it applies to third-country
products marketed in the EU. As Shin Nippon is
marketed in the EU by the AIFM, BG & Co Limited,
via the National Private Placement Regime (‘NPPR’)
the following disclosures have been provided to
comply with the high-level requirements of SFDR.
The AIFM has adopted Baillie Gifford & Co’s
stewardship principles and guidelines as its
policyonintegration of sustainability risks in
investment decisions.
Baillie Gifford & Co believes that a company
cannot be financially sustainable in the long run if
its approach to business is fundamentally out of
line with changing societal expectations. It defines
‘sustainability’ as a deliberately broad concept which
encapsulates a company’s purpose, values, business
model, culture, and operating practices.
Baillie Gifford & Co’s approach to investment
isbased on identifying and holding high quality
growth businesses that enjoy sustainable
competitive advantages in their marketplace. Todo
this it looks beyond current financial performance,
undertaking proprietary research tobuild up an
in-depth knowledge of an individual company and a
view on its long-term prospects. Thisincludes the
consideration of sustainability factors
(environmental, social and/or governance matters)
which it believes will positively or negatively
influence the financial returns of an investment.
Thelikely impact on the return of the portfolio from
Sustainable Finance Disclosure
Regulation (‘SFDR’)
apotential or actual material decline in the valueof
investment due to the occurrence of
anenvironmental, social or governance event or
condition will vary and will depend on several
factorsincluding but not limited to the type, extent,
complexity and duration of an event or condition,
prevailing market conditions and existence of any
mitigating factors.
Whilst consideration is given to sustainability matters,
there are no restrictions on the investment universe
of the Company, unless otherwise stated within in its
investment objective & policy. Baillie Gifford & Co
can invest in any companies it believes could create
beneficial long-term returns for investors. However,
this might result in investments being made in
companies that ultimately cause a negative outcome
for the environment or society.
More detail on the Manager’s approach to
sustainability can be found in the stewardship
principles and guidelines document, available publicly
on the Baillie Gifford website bailliegifford.com and
by scanning the QR code below.
The underlying investments do not take into
accountthe EU criteria for environmentally
sustainable economic activities established under
the EU Taxonomy Regulation.
125
Baillie Gifford Shin Nippon PLC
Glossary of terms and Alternative
Performance Measures (‘APM’)
An alternative performance measure is a financial measure of historical or future financial performance,
financial position, or cash flows, other than a financial measure defined or specified in the applicable
financial reporting framework. The APMs noted below are commonly used measures within the investment
trust industry and serve to improve comparability between investment trusts.
Total assets
This is the Company’s definition of Adjusted Total Assets, being the total value of all assets held less all
liabilities (other than liabilities in the form of borrowings).
Net Asset Value
Also described as shareholders’ funds, Net Asset Value (‘NAV’) is the value of total assets less liabilities
(including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary
shares in issue.
Net Asset Value (borrowings at book value)
Borrowings are valued at adjusted net issue proceeds. The Company’s yen denominated loans are valued at
their sterling equivalent and adjusted for their arrangement fees. The value of the borrowings on this basis is
set out in note 11 on page 103.
Net Asset Value (borrowings at fair value) (APM)
This is a widely reported measure across the investment trust industry. Borrowings are valued at an estimate
of their market worth. The Company’s yen denominated fixed rate loans are fair valued using methodologies
consistent with International Private Equity and Venture Capital Valuation (‘IPEV’) guidelines. The value of
the borrowings on this basis is set out in note 18 on page 111. A reconciliation from NAV (with borrowings at
book value) to NAV per ordinary share (with borrowings at fair value) is provided below.
31 January 2026 31 January 2025
NAV per ordinary share (borrowings at book value) 146.3p 139.4p
Shareholders’ funds (borrowings at book value) £358,823,000 £389,690,000
Add: book value of borrowings £70,105,000 £83,676,000
Less: fair value of borrowings (£70,105,000) (£83,676,000)
NAV (borrowings at fair value)
£358,823,000 £389,690,000
Shares in issue at year end 245,320,073 279,491,301
NAV per ordinary share (borrowings at fair value)
146.3p 139.4p
Shareholder information
126
Annual Report and Financial Statements 2026
Premium/discount (APM)
As stockmarkets and share prices vary, an investment trust’s share price is rarely the same as its NAV. When
the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount
is calculated by subtracting the NAV per share from the share price and is usually expressed as a percentage
of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.
2026
NAV (book)
2026
NAV (fair)
2025
NAV (book)
2025
NAV (fair)
Closing NAV per share 146.3p 146.3p 139.4p 139.4p
Closing share price 135.4p 135.4p 119.0p 119.0p
Discount (7.5%) (7. 5%) (14.6%) (14.6%)
The average discount/premium (APM) as disclosed on page 48 is calculated by taking an average of the
daily discount/premium percentage using NAV (with borrowings at fair value) for the relevant periods.
Ongoing charges (APM)
The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average
NAV (with borrowings at fair value). The ongoing charges have been calculated on the basis prescribed by
the Association of Investment Companies.
A reconciliation from the expenses detailed in the Income statement on page 92 is provided below:
31 January 2026 31 January 2025
Investment management fee £2,270,000 £2,482,000
Other administrative expenses £889,000 £714,000
Less: Non-recurring expenses
*
(£240,000) –
Total expenses (a) £2,919,000 £3,196,000
Average daily cum-income NAV
(with borrowings at fair value)
(b) £359,484,000 £401,677,000
Ongoing charges (a) as a percentage of (b) 0.81% 0.80%
*
Comprises the total costs incurred in connection with the share premium account cancellation and the 2026 Tender Offer.
127
Baillie Gifford Shin Nippon PLC
Total return (APM)
The total return is the return to shareholders after reinvesting the net dividend on the date that the share
price goes ex-dividend.
2026
NAV (book)
2026
Share price
2025
NAV (book)
2025
Share price
Closing NAV per share/share price
(a)
146.3 135.4 139.4 119.0
Dividend adjustment factor*
(b)
1.0047 1.0052 1.0059 1.0076
Adjusted closing NAV
per share/share price
(c = a x b)
1 4 7. 0 136.1 140.2 119.9
Opening NAV per share/share price
(d)
139.4 119.0 147.8 126.2
Total return
(c ÷ d)-1
5.4% 14.4% (5.1%) (5.0%)
*
The dividend adjustment factor is calculated on the assumption that the dividend of 0.60p (2025 – 0.80p) paid by the Company during the year was
reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow
money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders’
assets is called ‘gearing’. If the Company’s assets grow, the shareholders’ assets grow proportionately more
because the debt remains the same. But if the value of the Company’s assets falls, the situation is reversed.
Gearing can therefore enhance performance in rising markets but can adversely impact performance in
falling markets.
Gearing represents borrowings at book less cash and cash equivalents expressed as a percentage of
shareholders’ funds.
Gross gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds.
31 January 2026 31 January 2025
Gearing
*
£’000
Grossgearing
†
£’000
Gearing
*
£’000
Grossgearing
†
£’000
Borrowings (a) 70,105 70,105 83,676 83,676
Cash and cash equivalents (b) 16,689 – 20,797 –
Shareholders’ funds (c) 358,823 358,823 389,690 389,690
14.9% 19.5% 16.1% 21.5%
*
Gearing: ((a) – (b)) ÷ (c), expressed as a percentage.
†
Gross gearing: (a) ÷ (c), expressed as a percentage.
Shareholder information
128
Annual Report and Financial Statements 2026
Leverage
For the purposes of the Alternative Investment Fund Managers (AIFM) Regulations, leverage is any method
which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It
is expressed as a ratio between the Company’s exposure and its NAV and can be calculated on a gross
and a commitment method. Under the gross method, exposure represents the sum of the Company’s
positions after the deduction of sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash
balances and after certain hedging and netting positions are offset against each other.
Active share (APM)
Active share, a measure of how actively a portfolio is managed, is the percentage of the quoted equity
portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the
portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index
and an active share of zero indicates a portfolio that tracks the index.
Net liquid assets
Net liquid assets comprise current assets less current liabilities, excluding borrowings.
Share split
A share split (or stock split) is the process by which a company divides its existing shares into multiple
shares. Although the number of shares outstanding increases, the total value of the shares remains the
same with respect to the pre-split value.
Treasury shares
The Company has the authority to make market purchases of its ordinary shares for retention as treasury
shares for future reissue, resale, transfer, or for cancellation. Treasury shares do not receive distributions
and the Company is not entitled to exercise the voting rights attaching to them.
Private (unlisted) company
A private (unlisted) company means a company whose shares are not available to the general public for
trading and not quoted on a stock exchange.
Turnover
Turnover is calculated as the minimum of purchases and sales in a month, divided by the average market
value of the portfolio, summed to get rolling 12 month turnover data.
129
Baillie Gifford Shin Nippon PLC
Company
information
Directors
Chair: J Skinner
CEC Finn
AE Rotheroe
KJ Troup
Professor S Vijayakumar
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
T: +44 (0)370 889 3223
Alternative Investment
FundManagers, Secretaries
and Registered Office
Baillie Gifford & Co Limited
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)131 275 2000
bailliegifford.com
Depositary
The Bank of New York Mellon
(International) Limited
160 Queen Victoria Street
London EC4V 4LA
Independent Auditor
Johnston Carmichael LLP
7–11 Melville Street
Edinburgh EH3 7PE
Company details
shinnippon.co.uk
Company Registration No. SC093345
ISIN: GB00BFXYH242
Sedol: BFXYH24
Ticker: BGS
Legal Entity Identifier:
X5XCIPCJQCSUF8H1FU83
Further information
Client Relations Team
Baillie Gifford & Co
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)800 917 2112
enquiries@bailliegifford.com
Corporate Broker
Winterflood Securities Limited
Riverbank House
2 Swan Lane
London EC4R 3GA
shinnippon.co.uk
Calton Square, 1 Greenside Row, Edinburgh EH1 3AN
Telephone +44 (0)131 275 2000